EXHIBIT 10.44
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LOAN AGREEMENT
BY AND AMONG
SOURCE INTERLINK COMPANIES, INC.
AND
EACH OF ITS SUBSIDIARIES THAT ARE NAMED HEREIN AS BORROWERS
AS BORROWERS,
EACH OF ITS SUBSIDIARIES THAT ARE NAMED HEREIN AS GUARANTORS
AS GUARANTORS,
THE LENDERS THAT ARE SIGNATORIES HERETO
AS THE LENDERS,
AND
XXXXX FARGO FOOTHILL, INC.
AS THE ARRANGER AND ADMINISTRATIVE AGENT
DATED AS OF OCTOBER 30, 2003
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LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement"), is entered into as of
October 30, 2003, by and among, on the one hand, the lenders identified on the
signature pages hereof (such lenders, together with their respective successors
and permitted assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), XXXXX FARGO FOOTHILL, INC., a
California corporation, as the arranger and administrative agent for the Lenders
("Agent"), and, on the other hand, SOURCE INTERLINK COMPANIES, INC., a Missouri
corporation ("Parent"), each of Parent's Subsidiaries identified on the
signature pages hereof as "Borrowers" (such Subsidiaries, together with Parent,
are referred to hereinafter each individually as a "Borrower", and individually
and collectively, jointly and severally, as the "Borrowers"), and each of
Parent's Subsidiaries identified on the signature pages hereof as "Guarantors"
(such Subsidiaries are referred to hereinafter each individually as a
"Guarantor", and individually and collectively, jointly and severally, as the
"Guarantors ") .
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1. DEFINITIONS. As used in this Agreement, the following
terms shall have the following definitions:
"Account" means an account (as that term is defined in the
Code), and any and all supporting obligations in respect thereof.
"Account Debtor" means any Person who is obligated under, with
respect to, or on account of, an Account, chattel paper, or a General
Intangible.
"ACH Transactions" means any cash management or related
services (including the Automated Clearing House processing of electronic funds
transfers through the direct Federal Reserve Fedline system) provided by a Bank
Product Provider for the account of Administrative Borrower or its Subsidiaries.
"Acquisition" means the acquisition of (i) all or
substantially all of the Stock of any Person, or (ii) all or substantially all
of the assets of any Person or the assets comprising any material line of
business of such Person.
"Administrative Borrower" has the meaning set forth in Section
17.10.
"Advances" has the meaning set forth in Section 2.1(a).
"Affiliate" means, as applied to any Person, any other Person
who, directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that, for purposes of the definition of Eligible Accounts and
Section 7.13 hereof:
(a) any Person which owns directly or indirectly 10% or more of the Stock having
ordinary voting power for the election of directors or other members of the
governing body of a Person or 10% or more of the partnership or other ownership
interests of a Person (other than as a limited partner of such Person) shall be
deemed an Affiliate of such Person, (b) each director (or comparable manager) of
a Person shall be deemed to be an Affiliate of such Person, and (c) each
partnership or joint venture in which a Person is a partner or joint venturer
shall be deemed an Affiliate of such Person.
"Agent" means WFF, in its capacity as arranger and
administrative agent hereunder, and any successor thereto.
"Agent Advances" has the meaning set forth in Section
2.3(e)(i).
"Agent-Related Persons" means Agent, together with its
Affiliates, officers, directors, employees, attorneys, and agents.
"Agent's Account" means the Deposit Account of Agent
identified on Schedule A-1.
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Applicable Excess Cash Flow Percentage" means, with respect
to Excess Cash Flow for any Fiscal Year of the Parent, the percentage of Excess
Cash Flow set forth below opposite the applicable Total Debt Ratio as of the
last day of such Fiscal Year, as determined by Agent based upon the Loan
Parties' financial statements delivered to Agent and Lenders pursuant to Section
6.3(b) for such Fiscal Year:
Total Debt Ratio Percentage of Excess Cash Flow
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3.0 to 1.0 or higher 25%
Lower than 3.0 to 1.0 but
higher than or equal
to 2.5 to 1.0 15%
Lower than 2.5 to 1.0 but
higher than or equal
to 2.0 to 1.0 10%
Lower than 2.0 to 1.0 0%
provided, that, notwithstanding the foregoing, if the Loan Parties fail to
deliver financial statements to the Agent and the Lenders for any Fiscal Year in
accordance with Section 6.3(b), then until such financial statements are
delivered, the Applicable Excess Cash Flow Percentage shall be 25%.
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to (a) during the period from and after the date
of the execution and delivery of this
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Agreement up to the date that is the first anniversary of the Closing Date, 3%
times the sum of (i) the Maximum Revolver Amount, plus (ii) the outstanding
principal balance of the Term Loan on the date immediately prior to the date of
determination, (b) during the period from and including the date that is the
first anniversary of the Closing Date up to the date that is the second
anniversary of the Closing Date, 2% times the sum of (i) the Maximum Revolver
Amount, plus (ii) the outstanding principal balance of the Term Loan on the date
immediately prior to the date of determination, and (c) during the period from
and including the date that is the second anniversary of the Closing Date up to
the Maturity Date, 1% times the sum of (i) the Maximum Revolver Amount, plus
(ii) the outstanding principal balance of the Term Loan on the date immediately
prior to the date of determination.
"Appraised Value" means the net forced liquidation value (net
of liquidation expenses) of any Equipment or the net fair market value (net of
liquidation expenses) of any Real Property Collateral, in each case, determined
by the most recent appraisal performed by a qualified independent appraiser
selected by Agent, which appraisal is in form and substance satisfactory to
Agent.
"Assignee" has the meaning set forth in Section 14.1(a).
"Assignment and Acceptance" means an Assignment and Acceptance
Agreement substantially in the form of Exhibit A-1.
"Authorized Person" means any officer or employee of
Administrative Borrower.
"Availability" means, as of any date of determination, the
amount that Borrowers are entitled to borrow as Advances hereunder (after giving
effect to all then outstanding Obligations (other than Bank Product Obligations)
and all sublimits and reserves then applicable hereunder).
"Bank Product" means any financial accommodation extended to
Administrative Borrower or its Subsidiaries by a Bank Product Provider (other
than pursuant to this Agreement) including: (a) credit cards, (b) credit card
processing services, (c) debit cards, (d) purchase cards, (e) ACH Transactions,
(f) cash management, including controlled disbursement, accounts or services, or
(g) transactions under Hedge Agreements.
"Bank Product Agreements" means those agreements entered into
from time to time by Administrative Borrower or its Subsidiaries with a Bank
Product Provider in connection with the obtaining of any of the Bank Products.
"Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Administrative
Borrower or its Subsidiaries to any Bank Product Provider pursuant to or
evidenced by the Bank Product Agreements and irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, and including all such amounts
that Administrative Borrower or its Subsidiaries are obligated to reimburse to
Agent or any member of the Lender Group as a result of Agent or such member of
the Lender Group purchasing participations from, or executing indemnities or
reimbursement obligations to,
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a Bank Product Provider with respect to the Bank Products provided by such Bank
Product Provider to Administrative Borrower or its Subsidiaries.
"Bank Product Provider" means Xxxxx Fargo or any of its
Affiliates.
"Bank Product Reserve" means, as of any date of determination,
the amount of reserves that Agent has established (based upon the Bank Product
Providers' reasonable determination of the maximum expected credit exposure in
respect of then extant Bank Products) in respect of Bank Products then provided
or outstanding, provided that such reserves shall be established at the time
Xxxxx Fargo or any of its Affiliates provides the applicable Bank Products.
"Bankruptcy Code" means, as applicable, (i) the United States
Bankruptcy Code, (ii) the Bankruptcy and Insolvency Act (Canada) or (iii) the
Companies' Creditors Arrangement Act (Canada), or any similar legislation in a
relevant jurisdiction, in each case as in effect from time to time.
"Xxxxxx and Xxxxx" means, collectively, Xxxxxx and Noble, Inc.
and each of its Affiliates.
"Base LIBOR Rate" means the rate per annum, determined by
Agent in accordance with its customary procedures, and utilizing such electronic
or other quotation sources as it considers appropriate (rounded upwards, if
necessary, to the next 1/100%), to be the rate at which Dollar deposits (for
delivery on the first day of the requested Interest Period) are offered to major
banks in the London interbank market 2 Business Days prior to the commencement
of the requested Interest Period, for a term and in an amount comparable to the
Interest Period and the amount of the LIBOR Rate Loan requested (whether as an
initial LIBOR Rate Loan or as a continuation of an extant LIBOR Rate Loan or as
a conversion of a Base Rate Loan to a LIBOR Rate Loan) by Administrative
Borrower in accordance with this Agreement, which determination shall be
conclusive in the absence of manifest error.
"Base Rate" means, the rate of interest announced, from time
to time, within Xxxxx Fargo at its principal office in San Francisco as its
"prime rate", with the understanding that the "prime rate" is one of Xxxxx
Fargo's base rates (not necessarily the lowest of such rates) and serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto and is evidenced by the recording thereof after its
announcement in such internal publications as Xxxxx Fargo may designate.
"Base Rate Loan" means the portion of the Advances or the Term
Loan that bears interest at a rate determined by reference to the Base Rate.
"Base Rate Margin" means the percentage points set forth below
corresponding to average Excess Availability for the three-month period ending
as of the last day of the immediately preceding month, as determined by Agent
based upon the Borrowing Base and Excess Availability calculation delivered to
Agent pursuant to Section 6.2(j) for such three-month period:
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Level Average Excess Availability Base Rate Margin
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I Greater than $10,000,000 Zero percentage points
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II $10,000,000 or less but greater than or 0.25 percentage points
equal to $5,000,000
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III Less than $5,000,000 0.50 percentage points
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provided, that, notwithstanding the foregoing, (a) each adjustment to the Base
Rate Margin shall be effective from the date of delivery of the Loan Parties'
Excess Availability calculation for the three-month period used to determine the
Base Rate Margin until the date of delivery of such Excess Availability
calculation pursuant to Section 6.2(j) hereof for the next succeeding
three-month period, (b) if the Loan Parties fail to deliver the Excess
Availability calculation to the Agent for any three-month period in accordance
with Section 6.2(j) hereof, then until such Excess Availability calculation is
delivered, the Base Rate Margin shall be set in accordance with Level III, and
(c) on and after the Closing Date and until the Excess Availability calculation
is delivered for the three-month period ending on January 31, 2004, the Base
Rate Margin shall be set at Level II above.
"Base Rate Term Loan Margin" means 2.50 percentage points.
"Benefit Plan" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA) or a benefit plan under Canadian Employee Benefit Laws
for which any Loan Party or any Subsidiary or ERISA Affiliate of any Loan Party
has been an "employer" (as defined in Section 3(5) of ERISA) or has held
equivalent status under Canadian Employee Benefit Laws within the past six
years.
"Board of Directors" means the board of directors (or
comparable managers) of Parent or any committee thereof duly authorized to act
on behalf of the board of directors (or comparable managers).
"Books" means all of Administrative Borrower's and its
Subsidiaries' now owned or hereafter acquired books and records (including all
of their Records indicating, summarizing, or evidencing their assets (including
the Collateral) or liabilities, all of Administrative Borrower's and its
Subsidiaries' Records relating to their business operations or financial
condition, and all of their goods or General Intangibles related to such
information).
"Borders" means, collectively, Borders Group, Inc. and each of
its Affiliates.
"Borrower" and "Borrowers" have the respective meanings set
forth in the preamble to this Agreement.
"Borrowing" means a borrowing hereunder consisting of Advances
(or term loans, in the case of the Term Loan) made on the same day by the
Lenders (or Agent on behalf thereof), or by Swing Lender in the case of a Swing
Loan, or by Agent in the case of an Agent Advance, in each case, to
Administrative Borrower.
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"Borrowing Base" means, as of any date of determination, the
result of:
(a) the lesser of:
(i) the sum of:
(A) the lesser of:
(x) the sum of: (1) 85% of the
amount of Eligible Accounts of the Fulfillment/ANS
Business Segment of the Loan Parties, less the
amount, if any, of the Dilution Reserve for the
Fulfillment/ANS Business Segment of the Loan Parties,
(2) 85% of the amount of Eligible Accounts of the
Fulfillment/DEYCO Business Segment of the Loan
Parties, less the amount, if any, of the Dilution
Reserve for the Fulfillment/DEYCO Business Segment of
the Loan Parties, (3) 85% of the amount of Eligible
Accounts of the Fulfillment/IPD Business Segment of
the Loan Parties, less the amount, if any, of the
Dilution Reserve for the Fulfillment/IPD Business
Segment of the Loan Parties, and (4) 85% of the
amount of Eligible Accounts of the Fulfillment/WMS
Business Segment of the Loan Parties, less the
amount, if any, of the Dilution Reserve for the
Fulfillment/WMS Business Segment of the Loan Parties,
and
(y) an amount equal to
Borrowers' Collections with respect to Accounts of
the Fulfillment Business Segment of the Loan Parties
for the immediately preceding 45 day period, and
(B) the lesser of:
(x) the sum of: (1) 85% of the
amount of Eligible Accounts of the In-Store
Services/Wire Business Segment of the Loan Parties,
less the amount, if any of the Dilution Reserve for
the In-Store Services/Wire Business Segment of the
Loan Parties, (2) 85% of the amount of Eligible
Accounts of the In-Store Services/Claiming Business
Segment of the Loan Parties, less the amount, if any
of the Dilution Reserve for the In-Store
Services/Claiming Business Segment of the Loan
Parties, and (3) 85% of the amount of Eligible
Accounts of the In-Store Services/Other Business
Segment of the Loan Parties, less the amount, if any
of the Dilution Reserve for the In-Store
Services/Other Business Segment of the Loan Parties,
and
(y) (1) if such date of
determination is prior to the first anniversary of
the Closing Date, an amount equal to 66-2/3% of
Borrowers' Collections with respect to Accounts of
the In-Store Services Business Segments of the Loan
Parties for the immediately preceding 90 day period,
(2) if such date of determination is on or after the
first anniversary of the Closing Date and prior to
the second anniversary of the Closing Date, an amount
equal to 50% of the Borrowers' Collections with
respect to Accounts of the In-Store Services Business
Segments of the
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Loan Parties for the immediately preceding 90day
period, and (3) if such date of determination is on
or after the second anniversary of the Closing Date,
an amount equal to 33-1/3% of the Borrowers'
Collections with respect to Accounts of the In-Store
Services Business Segments of the Loan Parties for
the immediately preceding 90 day period, and
(C) the lesser of:
(x) the sum of: (1) 85% of the
amount of Eligible Accounts of the Wood
Manufacturing/NC Business Segment of the Loan
Parties, less the amount, if any, of the Dilution
Reserve for the Wood Manufacturing/NC Business
Segment of the Loan Parties, and (2) 85% of the
amount of Eligible Accounts of the Wood
Manufacturing/Quincy Business Segment of the Loan
Parties, less the amount, if any, of the Dilution
Reserve for the Wood Manufacturing/Quincy Business
Segment of the Loan Parties, and
(y) an amount equal to
Borrowers' Collections with respect to Accounts of
the Wood Manufacturing Business Segments of the Loan
Parties for the immediately preceding 60 day period,
and
(ii) on and after the date that is 45 days after
the Closing Date, the WFF Availability,
provided that the aggregate amount of the Borrowing Base that may be
supported by In-Store Services Accounts at any time shall not exceed
the In-Store Services Subline Amount, minus
(b) the sum of (i) the Bank Product Reserve, (ii) the
Yaqui Lien Reserve, (iii) the Rent Reserve and (iv) the aggregate amount of such
other reserves, if any, established by Agent under Section 2.1(b).
"Business Day" means any day that is not a Saturday, Sunday,
or other day on which banks are authorized or required to close in the State of
New York, except that, if a determination of a Business Day shall relate to a
LIBOR Rate Loan, the term "Business Day" also shall exclude any day on which
banks are closed for dealings in Dollar deposits in the London interbank market.
"Business Segment" means any of the Fulfillment Business
Segments, the In-Store Services Business Segments or the Wood Manufacturing
Business Segments.
"Canadian Account Debtors" means Account Debtors which either
maintain their chief executive offices in Canada or are organized under the laws
of Canada.
"Canadian Documents" means the Canadian Security Agreement,
the Canadian Pledge Agreement and the Canadian Guaranty.
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"Canadian Employee Benefits Laws" means the Canadian Pension
Plan Act (Canada), the Pension Benefit Act (Ontario), the Pension Benefits
Standards Act (British Columbia), the Health Insurance Act (Ontario), the
Employment Standard Act (Ontario), the Employment Standards Act (British
Columbia) and any federal, provincial or local counterparts or equivalents, in
each case, as amended from time to time.
"Canadian Guaranty" means, collectively, those certain
Guaranties executed and delivered by the Canadian Guarantors in favor of Agent,
for the benefit of Lender Group, in form and substance satisfactory to Agent.
"Canadian Guarantors" means collectively the Subsidiaries of
Parent named in Part I of Schedule G-1.
"Canadian Income Tax Act" means the Income Tax Act (Canada),
R.S.C. 1985 C.1 (5th Supp), as amended.
"Canadian Pledge Agreement" means, collectively, those certain
Pledge Agreements executed and delivered by the Parent and The Source-Canada
Corp. in favor of Collateral Agent, for the benefit of Lender Group, the Bank
Product Providers and the Term Loan B Lender Group, in form and substance
satisfactory to Agent.
"Canadian Security Agreement" means, collectively, those
certain Security Agreements executed and delivered by the Canadian Guarantors in
favor of Collateral Agent, for the benefit of Lender Group, the Bank Product
Providers and the Term Loan B Lender Group, in form and substance satisfactory
to Agent.
"Capital Expenditures" means, with respect to any Person for
any period, the sum of (a) the aggregate of all expenditures by such Person and
its Subsidiaries during such period that are capital expenditures as determined
in accordance with GAAP, whether such expenditures are paid in cash or financed,
and (b) to the extent not covered by clause (a), the aggregate of all
expenditures by such Person and its Subsidiaries during such period to acquire
by purchase or otherwise the business or capitalized assets of, or the Stock of,
any other Person.
"Capital Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means that portion of the
obligations under a Capital Lease that is required to be capitalized in
accordance with GAAP.
"Cash Equivalents" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within 1 year from the date of acquisition thereof, (b)
marketable direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality thereof
maturing within 1 year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor's Rating Group ("S&P") or Xxxxx'x Investors Service, Inc.
("Moody's"), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from
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S&P or at least P-1 from Moody's, (d) certificates of deposit or bankers'
acceptances maturing within 1 year from the date of acquisition thereof issued
by any bank organized under the laws of the United States or any state thereof
having at the date of acquisition thereof combined capital and surplus of not
less than $250,000,000, (e) demand Deposit Accounts maintained with any bank
organized under the laws of the United States or any state thereof so long as
the amount maintained with any individual bank is less than or equal to $100,000
and is insured by the Federal Deposit Insurance Corporation, and (f) Investments
in money market funds substantially all of whose assets are invested in the
types of assets described in clauses (a) through (e) above.
"Cash Management Account" has the meaning set forth in Section
2.7(a).
"Cash Management Agreements" means those certain cash
management agreements, in form and substance satisfactory to Agent, each of
which is among Administrative Borrower or one of its Subsidiaries, Collateral
Agent, and one of the Cash Management Banks.
"Cash Management Bank" has the meaning set forth in Section
2.7(a).
"Change of Control" means that (a) any "person" or "group"
(within the meaning of Sections 13(d) and 14(d) of the Exchange Act), other than
Permitted Holders, becomes the beneficial owner (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of 20%, or more, of the Stock of
Parent having the right to vote for the election of members of the Board of
Directors, or (b) a majority of the members of the Board of Directors do not
constitute Continuing Directors, or (c) any Borrower ceases to own, directly or
indirectly, and control 100% of the outstanding Stock of each of its
Subsidiaries extant as of the Closing Date, or (d) either S. Xxxxxx Xxxxxx or
Xxx Xxxxxx ceases to be involved in the day to day operations and management of
the business of the Loan Parties, and a successor reasonably acceptable to Agent
is not appointed on terms reasonably acceptable to Agent within 120 days of such
cessation of involvement, provided that Agent agrees that Xxxxx X. Xxxxxx shall
be an acceptable successor for either Person.
"Closing Date" means the date of the making of the initial
Advance (or other extension of credit) hereunder.
"Closing Date Business Plan" means the set of Projections of
the Loan Parties for the 2 year period following the Closing Date (on a year by
year basis, and for the 1 year period following the Closing Date, on a month by
month basis), in form and substance (including as to scope and underlying
assumptions) satisfactory to Agent.
"Code" means the New York Uniform Commercial Code, as in
effect from time to time.
"Collateral" means all assets and interests in assets and
proceeds thereof now owned or hereafter acquired by any Loan Party in or upon
which a Lien is granted under any of the Loan Documents.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person
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in possession of, having a Lien upon, or having rights or interests in any Loan
Party's Books, Equipment or, Inventory, in each case, in form and substance
satisfactory to Agent.
"Collateral Agent" means WFF, in its capacity as collateral
agent for (i) Agent, the Lenders and the Bank Product Providers and (ii) the
Term Loan B Agent and the Term Loan B Lenders.
"Collateral Agent's Liens" means the Liens granted by Loan
Parties or their Subsidiaries to the Collateral Agent, for the benefit of the
Lender Group, the Bank Product Providers and the Term Loan B Lender Group, under
any of the Loan Documents.
"Collections" means all cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds).
"Commitment" means, with respect to each Lender, its Revolver
Commitment, its Term Loan Commitment, or its Total Commitment, as the context
requires, and, with respect to all Lenders, their Revolver Commitments, their
Term Loan Commitments, or their Total Commitments, as the context requires, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 or in the Assignment and Acceptance
pursuant to which such Lender became a Lender hereunder in accordance with the
provisions of Section 14.1.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit C-1 delivered by the chief financial officer of Parent to
Agent.
"Continuing Director" means (a) any member of the Board of
Directors who was a director (or comparable manager) of Parent on the Closing
Date, and (b) any individual who becomes a member of the Board of Directors
after the Closing Date if such individual was appointed or nominated for
election to the Board of Directors by a majority of the Continuing Directors,
but excluding any such individual originally proposed for election in opposition
to the Board of Directors in office at the Closing Date in an actual or
threatened election contest relating to the election of the directors (or
comparable managers) of Parent and whose initial assumption of office resulted
from such contest or the settlement thereof.
"Contribution Agreement" means a contribution agreement
executed and delivered by each Borrower and Guarantor, the form and substance of
which is satisfactory to Agent.
"Control Agreement" means a control agreement, in form and
substance satisfactory to Agent, executed and delivered by any Loan Party,
Collateral Agent, and the applicable securities intermediary (with respect to a
Securities Account) or a bank (with respect to a Deposit Account).
"Copyright Security Agreement" means a copyright security
agreement executed and delivered by each applicable Loan Party and Collateral
Agent, the form and substance of which is satisfactory to Agent.
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"Daily Balance" means, as of any date of determination and
with respect to any Obligation, the amount of such Obligation owed at the end of
such day.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any
Advance (or other extension of credit) that it is required to make hereunder on
the date that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) for the first 3 days from
and after the date the relevant payment is due, the Base Rate, and (b)
thereafter, the interest rate then applicable to Advances that are Base Rate
Loans (inclusive of the Base Rate Margin applicable thereto).
"Deposit Account" or "DDA" means any deposit account (as that
term is defined in the Code).
"Designated Account" means the Deposit Account of
Administrative Borrower identified on Schedule D-1.
"Designated Account Bank" has the meaning ascribed thereto on
Schedule D-1.
"DEYCO" means Xxxxx X. Xxxxx, Inc., a New York corporation.
"DEYCO Letter of Intent" means the letter agreement dated
August 11, 2003, between JVCO, an entity to be owned by Xxxx Xxxxx, Xxxxx
Xxxxxxx and Xxxx XxXxxxx, and ICI, with respect to a proposed management
agreement between ICI and JVCO pursuant to which, among other things, JVCO would
manage the operations of DEYCO and JVCO would be granted the exclusive right to
purchase certain assets of DEYCO.
"DEYCO Sale" has the meaning ascribed thereto in Section 7.4.
"Dilution" means, for any Business Segment, 3-Month Dilution
or 12-Month Dilution, whichever is greater.
"Dilution Reserve" means, for each Business Segment as of any
date of determination, an amount sufficient to reduce the advance rate against
Eligible Accounts of such Business Segment by 1 percentage point for each
percentage point by which Dilution for such Business Segment is in excess of 5%.
"Disbursement Letter" means an instructional letter executed
and delivered by Administrative Borrower to Agent regarding the extensions of
credit to be made on the Closing Date, the form and substance of which is
satisfactory to Agent.
"Dollars" or "$" means United States dollars.
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"Due Diligence Certificate" means the Due Diligence
Certificate submitted by Agent to Administrative Borrower, together with
Borrowers' completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"EBITDA" means, with respect to any fiscal period, Parent's
and its Subsidiaries' consolidated net earnings (or loss), minus extraordinary
gains and interest income, plus interest expense, income taxes, depreciation and
amortization, the prepayment premium in the amount of $125,000 to be paid by
certain Borrowers to Congress Financial Corporation (Western) on the Closing
Date, non-cash charges related to the termination on the Closing Date of the
credit facilities provided by the Existing Lenders to the Loan Parties and
relocation expenses for such period, as determined in accordance with GAAP,
provided that only relocation expenses incurred prior to the Closing Date shall
be added to consolidated net earnings (or loss) for purpose of this definition.
"Eligible Accounts" means those Accounts created by one of the
Eligible Loan Parties in the ordinary course of its business, that arise out of
its sale of goods or rendition of services, that comply with each of the
representations and warranties respecting Eligible Accounts made in the Loan
Documents, and that are not excluded as ineligible by virtue of one or more of
the excluding criteria set forth below; provided, however, that such criteria
may be revised from time to time by Agent in Agent's Permitted Discretion to
address the results of any audit performed by Agent from time to time after the
Closing Date. In determining the amount to be included, Eligible Accounts shall
be calculated net of customer deposits and unapplied cash. Eligible Accounts
shall not include the following:
(a) (i) Accounts that the Account Debtor has
failed to pay within 90 days of original invoice date, provided that,
up to $5,000,000 of In-Store Services Accounts outstanding at any time
shall not be excluded from Eligible Accounts solely by reason of this
subclause (i) if such In-Store Services Accounts are not past the
invoice date by more than 180 days, or (ii) Accounts with selling terms
of more than 60 days, provided that (A) Fulfillment/WMS Accounts shall
not be excluded from Eligible Accounts solely by reason of this
subclause (ii) if such Accounts have selling terms of not more than 90
days, (B) In-Store Services/Claiming Accounts arising under the retail
display payment claiming business of US Marketing Services shall not be
excluded from Eligible Accounts solely by reason of this subclause (ii)
if such Accounts have selling terms providing for payment not more than
90 days after the end of each calendar quarter, and (C) Accounts which
are covered by a credit insurance policy (which policy has been
assigned to the Collateral Agent) in accordance with subclause (z) of
clause (f) below shall not be excluded from Eligible Accounts solely by
reason of this subclause (ii) if such Accounts have selling terms of
not more than 90 days,
(b) Accounts owed by an Account Debtor (or its
Affiliates) where 50% or more of all Accounts owed by that Account
Debtor (or its Affiliates) are deemed ineligible under clause (a)
above, provided that no Accounts shall be excluded from Eligible
Accounts solely by reason of this clause (b) until the date which is 10
Business Days after Agent has delivered to Administrative Borrower
written notice of the effectiveness of this clause (b),
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(c) Accounts with respect to which the Account
Debtor is an Affiliate of any Loan Party or an employee or agent of any
Loan Party or any Affiliate of any Loan Party,
(d) Accounts arising in a transaction wherein
goods are placed on consignment or are sold pursuant to a guaranteed
sale, a sale or return (other than in connection with any Fulfillment
Accounts), a sale on approval, a xxxx and hold, or any other terms by
reason of which the payment by the Account Debtor may be conditional,
unless such Accounts arise under a Program Contract which includes the
security interest or xxxx and hold provisions, as applicable, set forth
in Exhibit P-1,
(e) Accounts that are not payable in (i)
Dollars, (ii) in the case of Accounts of any Canadian Guarantor,
Canadian Dollars, or (iii) in the case of Accounts eligible by reason
of subclause (y) or (z) of clause (f) below, Australian Dollars or
Euros,
(f) Accounts with respect to which the Account
Debtor either (i) does not maintain its chief executive office in the
United States or Canada, or (ii) is not organized under the laws of the
United States or any state thereof, of the laws of Canada or any
province thereof, or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality, or other
political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof, unless (y) the Account
is supported by an irrevocable letter of credit satisfactory to Agent
(as to form, substance, and issuer or domestic confirming bank) that
has been delivered to Agent and is directly drawable by Agent, or (z)
(1) the Account is covered by credit insurance in form, substance, and
amount, and by an insurer, satisfactory to Agent, (2) all rights with
respect thereto have been assigned to Collateral Agent, and (3) not
more than 180 days have elapsed from the invoice date for such Account,
provided that, except for Accounts described in the preceding
subclauses (y) or (z), the aggregate amount of Eligible Accounts owing
by Canadian Account Debtors shall not exceed $3,000,000.
(g) Accounts with respect to which the Account
Debtor is either (i) the United States, Canada or any department,
agency, or instrumentality of the United States (exclusive, however, of
Accounts with respect to which the applicable Borrower has complied, to
the reasonable satisfaction of Agent, with the Assignment of Claims
Act, 31 USC Section 3727 or the Financial Administration Act (Canada)),
or (ii) any state of the United States or province of Canada,
(h) Accounts with respect to which the Account
Debtor is a creditor of any Loan Party, has or has asserted a right of
setoff, or has disputed its obligation to pay all or any portion of the
Account, to the extent of such claim, right of setoff, or dispute,
(i) Accounts with respect to an Account Debtor
whose total obligations owing to any Business Segment of the Loan
Parties exceed (A) if such Account Debtor is Xxxxxx and Noble or
Borders, (x) in the case of Wood Manufacturing Accounts and Fulfillment
Accounts owing by Xxxxxx and Xxxxx or Borders, 35% for each such
Account Debtor in each such Business Segment and (y) in the case of all
other Accounts owing by Xxxxxx and Noble or Border, 15% for each such
Account Debtor, and
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(B) for all other Account Debtors, 10% for each such Account Debtor
(such applicable percentage, as applied to a particular Account Debtor,
being subject to reduction by Agent in its Permitted Discretion if the
creditworthiness of such Account Debtor deteriorates) of all Eligible
Accounts to such Business Segment, to the extent of the obligations
owing by such Account Debtor to such Business Segment in excess of such
percentages; provided, however, that, in each case, the amount of
Eligible Accounts that are excluded because they exceed the foregoing
percentages shall be determined by Agent based on all of the otherwise
Eligible Accounts of such Business Segments prior to giving effect to
any eliminations based upon the foregoing concentration limit for such
Business Segment,
(j) Accounts owing by an Account Debtor whose
total obligations owing to the Loan Parties, on a consolidated basis,
exceed (A) if such Account Debtor is Xxxxxx and Xxxxx or Borders, 15%
for each such Account Debtor, and (B) for all other Account Debtors,
10% for each such Account Debtor (such applicable percentage, as
applied to a particular Account Debtor, being subject to reduction by
Agent in its Permitted Discretion if the creditworthiness of such
Account Debtor deteriorates) of all Eligible Accounts, to the extent of
the obligations in excess of such percentage owing by such Account
Debtor, as applicable; provided, however, that, in each case, the
amount of Eligible Accounts that are excluded because they exceed the
foregoing percentage shall be determined by Agent based on all of the
otherwise Eligible Accounts prior to giving effect to any eliminations
based upon the foregoing concentration limit,
(k) Accounts with respect to which the Account
Debtor is subject to an Insolvency Proceeding, is not Solvent, has gone
out of business, or as to which a Loan Party has received notice of an
imminent Insolvency Proceeding or a material impairment of the
financial condition of such Account Debtor,
(l) Accounts with respect to which the Account
Debtor is located in a state or jurisdiction (e.g., New Jersey,
Minnesota, and West Virginia) that requires, as a condition to access
to the courts of such jurisdiction, that a creditor qualify to transact
business, file a business activities report or other report or form, or
take one or more other actions, unless the applicable Eligible Loan
Party has so qualified, filed such reports or forms, or taken such
actions (and, in each case, paid any required fees or other charges),
except to the extent that the applicable Eligible Loan Party may
qualify subsequently as a foreign entity authorized to transact
business in such state or jurisdiction and gain access to such courts,
without incurring any cost or penalty viewed by Agent to be significant
in amount, and such later qualification cures any access to such courts
to enforce payment of such Account,
(m) Accounts, the collection of which, Agent, in
its Permitted Discretion, believes to be doubtful by reason of the
Account Debtor's financial condition,
(n) Accounts that are not subject to a valid and
perfected first priority Agent's Lien,
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(o) Accounts with respect to which (i) the goods
giving rise to such Account have not been shipped and billed to the
Account Debtor, or (ii) the services giving rise to such Account have
not been performed and billed to the Account Debtor, provided that this
clause (o) shall not exclude Accounts where only delivery is required
to complete performance so long as such Accounts arise under a Program
Contract which includes the xxxx and hold provisions set forth in
Exhibit P-1, or
(p) Accounts that represent the right to receive
progress payments or other advance xxxxxxxx that are due prior to the
completion of performance by the applicable Eligible Loan Party of the
subject contract for goods or services.
"Eligible Equipment" means Equipment of the Eligible Loan
Parties located at one of the business locations of such Eligible Loan Parties
set forth on Schedule E-1, that complies with each of the representations and
warranties respecting Eligible Equipment made by such Eligible Loan Parties in
the Loan Documents, and that is not excluded as ineligible by virtue of the one
or more of the criteria set forth below; provided, however, that such criteria
may be fixed and revised from time to time by Agent in Agent's Permitted
Discretion to address the results of any audit or appraisal performed by Agent
from time to time after the Closing Date. In determining the amount to be
included, Equipment shall be valued based upon the Net Liquidation Percentage
times the most recent appraised value of such Equipment, which appraisal shall
be based upon the net forced liquidation value of such Equipment. An item of
Equipment shall not be included in Eligible Equipment if:
(a) an Eligible Loan Party does not have good,
valid, and marketable title thereto,
(b) it is not located at one of the locations in
the continental United States or Canada set forth on Schedule E-1,
(c) it is located on real property leased by a
Loan Party unless (i) it is either subject to a Collateral Access
Agreement executed by the lessor, or other third party, as the case may
be, or (ii) Agent has established a Rent Reserve against the Borrowing
Base for such Leased Real Property location,
(d) it is not subject to a valid and perfected
first priority Agent's Lien,
(e) it is substantially worn, damaged, defective
or obsolete, or it constitutes furnishings, parts, fixtures or is
affixed to real property, unless such Equipment is affixed to Real
Property that comprises Eligible Real Property Collateral,
(f) the Agent has not received evidence of the
property insurance required by this Agreement with respect to such
Equipment, or
(g) it is subject to a lease with any Person.
The Administrative Borrower may amend Schedule E-1, provided that (i) such
amendment occurs by written notice to Agent not less than 30 days prior to the
date on which the Eligible Equipment is moved to such new location, (ii) such
new location is within the continental United
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States or Canada, and (iii) at the time of such written notification, the
applicable Eligible Loan Party provides any financing statements or fixture
filings necessary to perfect and continue perfected the Collateral Agent's Liens
on such assets and, to the extent it is located on real property leased by a
Loan Party, provides to Agent a Collateral Access Agreement.
"Eligible Loan Party" mean any Loan Party named in Schedule
E-2.
"Eligible Real Property Collateral" has the meaning set forth
in Section 3.1(v).
"Eligible Transferee" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having total
assets in excess of $250,000,000, (b) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development or a political subdivision of any such country and
which has total assets in excess of $250,000,000, provided that such bank is
acting through a branch or agency located in the United States, (c) a finance
company, insurance company, or other financial institution or fund that is
engaged in making, purchasing, or otherwise investing in commercial loans in the
ordinary course of its business and having (together with its Affiliates) total
assets in excess of $250,000,000, (d) any Affiliate (other than individuals) of
a Lender, (e) so long as no Event of Default has occurred and is continuing, any
other Person approved by Agent and Administrative Borrower (which approval of
Administrative Borrower shall not be unreasonably, withheld, delayed, or
conditioned), and (f) during the continuation of an Event of Default, any other
Person approved by Agent.
"Enterprise Value" means the "enterprise value" of Parent and
its Subsidiaries, as determined by Agent pursuant to an enterprise valuation
satisfactory to Agent, using a methodology similar to the methodology used in
the enterprise valuation required pursuant to Section 3.2(d), and performed by a
third party valuation company engaged by, and acceptable to, Agent (it being
understood that the Borrowers shall be responsible for all fees, costs and
expenses incurred by Agent in connection with each such valuation to the extent
set forth in Section 2.11(c)).
"Environmental Actions" means any complaint, summons,
citation, notice, directive, order, claim, litigation, investigation, judicial
or administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations or alleged
violations of Environmental Laws or releases of Hazardous Materials from (a) any
assets, properties, or businesses of any Loan Party, any Subsidiary of a Loan
Party, or any of their predecessors in interest, (b) from adjoining properties
or businesses, or (c) from or onto any facilities which received Hazardous
Materials generated by any Loan Party, any Subsidiary of a Loan Party, or any of
their predecessors in interest.
"Environmental Law" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
permit, binding and enforceable guideline, binding and enforceable written
policy or rule of common law now or hereafter in effect and in each case as
amended, or any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment, to the extent
binding on any Loan Party or any Subsidiary of a Loan Party, relating to the
environment, human health, employee health and safety, or Hazardous Materials,
including CERCLA; RCRA; the Federal Water
- 16 -
Pollution Control Act, 33 USC Section 1251 et seq; the Toxic Substances Control
Act, 15 USC Section 2601 et seq; the Clean Air Act, 42 USC Section 7401 et seq.;
the Safe Drinking Water Act, 42 USC Section 3803 et seq.; the Oil Pollution Act
of 1990, 33 USC Section 2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 USC Section 11001 et seq.; the Hazardous Material
Transportation Act, 49 USC Section 1801 et seq.; and the Occupational Safety and
Health Act, 29 USC Section 651 et seq. (to the extent it regulates occupational
exposure to Hazardous Materials); the Canadian Environmental Protection Act
(Canada); the Fisheries Act (Canada); the Transportation of Dangerous Goods Act
(Canada); the Environmental Protection Act (Ontario); the Water Resource Act
(Ontario); the Waste Management Act (British Columbia); the Environmental
Quality Act (Quebec); and any federal, state, provincial and local or foreign
counterparts or equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"Equipment" means equipment (as that term is defined in the
Code), and includes machinery, machine tools, motors, furniture, furnishings,
fixtures, vehicles (including motor vehicles), computer hardware, tools, parts,
and goods (other than consumer goods, farm products, or Inventory), wherever
located, including all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Loan Party or a Subsidiary of a Loan Party under IRC Section 414(b), (b) any
trade or business subject to ERISA whose employees are treated as employed by
the same employer as the employees of a Loan Party or a Subsidiary of a Loan
Party under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA
and Section 412 of the IRC, any organization subject to ERISA that is a member
of an affiliated service group of which a Loan Party or a Subsidiary of a Loan
Party is a member under IRC Section 414(m), or (d) solely for purposes of
Section 302 of ERISA and Section 412 of the IRC, any Person subject to ERISA
that is a party to an arrangement with a Loan Party or a Subsidiary of a Loan
Party and whose employees are aggregated with the employees of a Loan Party or a
Subsidiary of a Loan Party under IRC Section 414(o).
"ERISA Event" means (a) a Reportable Event with respect to any
Benefit Plan or Multiemployer Plan, (b) the withdrawal of a Loan Party, any of
its Subsidiaries or ERISA Affiliates from a Benefit Plan during a plan year in
which it was a "substantial employer" (as defined in Section 4001(a)(2) of
ERISA), (c) the providing of notice of intent to terminate a
- 17 -
Benefit Plan in a distress termination (as described in Section 4041(c) of
ERISA), (d) the institution by the PBGC of proceedings to terminate a Benefit
Plan or Multiemployer Plan, (e) any event or condition (i) that provides a basis
under Section 4042(a)(1), (2), or (3) of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan or Multiemployer Plan,
or (ii) that may result in termination of a Multiemployer Plan pursuant to
Section 4041A of ERISA, (f) the partial or complete withdrawal within the
meaning of Sections 4203 and 4205 of ERISA, of a Loan Party, any of its
Subsidiaries or ERISA Affiliates from a Multiemployer Plan, (g) providing any
security to any Plan under Section 401(a)(29) of the IRC by a Loan Party or its
Subsidiaries or any of their ERISA Affiliates or (h) any equivalent event,
action, condition, proceeding or otherwise under Canadian Employee Benefit Laws.
"Event of Default" has the meaning set forth in Section 8.
"Excess Availability" means, as of any date of determination
or period, the amount equal to (x) Availability, plus (y) the amount of
unrestricted cash and Cash Equivalents of Borrowers and their Subsidiaries on
deposit in a Deposit Account or Securities Account which is the subject of a
Control Agreement and is maintained by a branch office of the bank or securities
intermediary located within the United States, minus (z) the aggregate amount,
if any, of all trade payables of Borrowers and their Subsidiaries aged in excess
of their historical levels with respect thereto and all book overdrafts of
Borrowers and their Subsidiaries in excess of their historical practices with
respect thereto, in each case as determined by Agent in its Permitted Discretion
for such date or period.
"Excess Cash Flow" means, for any fiscal period of Parent,
without duplication, (i) Parent's and its Subsidiaries' consolidated net
earnings (or loss), minus extraordinary gains and interest income, for such
period, plus (ii) all non-cash charges of Parent and its Subsidiaries deducted
in arriving at such consolidated net earnings (or loss) for such period, less
(iii) all non-cash credits of Parent and its Subsidiaries included in arriving
at such consolidated net earnings (or loss) for such period, less (iv) all
scheduled and mandatory cash principal payments on the Advances and the Term
Loan made during such period (but, in the case of the Advances, only to the
extent that the Revolver Commitment is permanently reduced by the amount of such
payments), and all scheduled cash principal payments on other Indebtedness of
Parent or any of its Subsidiaries during such period to the extent such other
Indebtedness is permitted to be incurred, and such payments are permitted to be
made, under this Agreement, less (v) the cash portion of Capital Expenditures
made by Parent and its Subsidiaries during such period to the extent permitted
to be made under this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
in effect from time to time.
"Existing Lenders" means Bank of America, N.A. and Congress
Financial Corporation (Western).
"Extraordinary Receipts" means any Collections received by the
Parent or any of its Subsidiaries not in the ordinary course of business (and
not consisting of proceeds described in Section 2.4(c)(v), (c)(vi) or (c)(viii)
hereof), including, (i) foreign, United States, state or local tax refunds
(other than the Specified Tax Refund), (ii) pension plan reversions, (iii)
proceeds of
- 18 -
insurance (including proceeds of the key man life insurance policies), but
excluding insurance with respect to Inventory, (iv) judgments, proceeds of
settlements or other consideration of any kind in connection with any cause of
action, (v) condemnation awards (and payments in lieu thereof), but excluding
condemnation awards with respect to Inventory, (vi) indemnity payments, and
(vii) any purchase price adjustment received in connection with any purchase
agreement.
"Family Member" means, with respect to any individual, any
other individual having a relationship by blood (to the second degree of
consanguinity), marriage, or adoption to such individual.
"Family Trusts" means, with respect to any individual, trusts
or other estate planning vehicles established for the benefit of such individual
or Family Members of such individual and in respect of which such individual
serves as trustee or in a similar capacity.
"Fee Letter" means that certain fee letter, dated as of even
date herewith, between Borrowers and Agent, in form and substance satisfactory
to Agent.
"FEIN" means Federal Employer Identification Number.
"Fiscal Year" means (i) in the case of the Parent and its
Subsidiaries other than IPD, Huck NC and Xxxx Xxxxxx, a fiscal year ending on
January 31st of each calendar year, and (ii) in the case of IPD, Huck NC and
Xxxx Xxxxxx, a fiscal year ending on the Friday closest to January 31 of each
calendar year.
"Fixed Charges" means with respect to Parent and its
Subsidiaries for any period, the sum, without duplication, of (a) Interest
Expense, (b) principal payments required to be paid during such period in
respect of Indebtedness, and (c) payments made pursuant to a lease and
distribution agreement dated April 29, 2002 between the Loan Parties and
Worldwide Media Service, Inc.
"Fixed Charge Coverage Ratio" means, with respect to Parent
and its Subsidiaries for any period, the ratio of (i) EBITDA for such period
minus Capital Expenditures made (to the extent not already incurred in a prior
period) or incurred during such period, and all federal, state, and local income
taxes accrued for such period to (ii) Fixed Charges for such period.
"Florida Headquarters" means the Loan Parties' Bonita Springs,
Florida corporate headquarters.
"Flow of Funds Agreement" means an agreement among the Loan
Parties, Collateral Agent and the Term Loan B Agent with respect to the fundings
to be made on the Closing Date.
"Fulfillment Accounts" means Accounts arising from goods sold
and services rendered by the Fulfillment Business Segments of the Loan Parties.
"Fulfillment Business Segments" means the Fulfillment/WMS
Business Segment, Fulfillment/DEYCO Business Segment, Fulfillment/ANS Business
Segment and Fulfillment/IPD Business Segment.
- 19 -
"Fulfillment/ANS Business Segment" means the business and
operations of the Loan Parties related to the distribution of magazines,
confections and general merchandise to the retail and wholesale market conducted
under the trade name "Austin News Service" on the Closing Date by the
Subsidiaries of Parent named in Part I-A of Schedule S-1.
"Fulfillment/DEYCO Business Segment" means the business and
operations of the Loan Parties related to the distribution of magazines,
confections and general merchandise to the retail and wholesale market conducted
on the Closing Date by the Subsidiaries of Parent named in Part I-B of Schedule
S-1.
Fulfillment/IPD Business Segment" means the business and
operations of the Loan Parties related to the distribution of magazines,
confections and general merchandise to the retail and wholesale market conducted
on the Closing Date by the Subsidiaries of Parent named in Part I-C of Schedule
S-1.
Fulfillment/WMS Accounts" means Accounts arising from goods
sold or services rendered by the Fulfillment/WMS Business Segment of the Loan
Parties.
"Fulfillment/WMS Business Segment" means the business and
operations of the Loan Parties related to the export of United States magazine
titles for distribution outside of the United States including that conducted on
the Closing Date by Source Interlink International, Inc., or under the trade
name "Worldwide Media Service" by the Subsidiaries of Parent named in Part I-D
of Schedule S-1.
"Funding Date" means the date on which a Borrowing occurs.
"Funding Losses" has the meaning set forth in Section
2.13(b)(ii).
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, consistently applied.
"General Intangibles" means general intangibles (as that term
is defined in the Code), including payment intangibles, contract rights, rights
to payment, rights arising under common law, statutes, or regulations, choses or
things in action, goodwill, patents, trade names, trade secrets, trademarks,
servicemarks, copyrights, blueprints, drawings, purchase orders, customer lists,
monies due or recoverable from pension funds, route lists, rights to payment and
other rights under any royalty or licensing agreements, infringement claims,
computer programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, insurance premium rebates, tax refunds, and tax
refund claims, and any and all supporting obligations in respect thereof, and
any other personal property other than Accounts, Deposit Accounts, goods,
Investment Property, and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal (including the
federal government of Canada), state, provincial, local, or other governmental
or administrative body,
- 20 -
instrumentality, department, or agency or any court, tribunal, administrative
hearing body, arbitration panel, commission, or other similar dispute-resolving
panel or body.
"Guarantor" means each Subsidiary of Parent named in Schedule
G-1 and each other Person that guarantees, pursuant to Section 6.15 or
otherwise, all or any part of the Obligations.
"Guaranty" means the Guaranty set forth in Section 18, the
Canadian Guaranty and any other guaranty executed and delivered by a Guarantor
in favor of Agent, for the benefit of the Lender Group and the Bank Product
Providers, in form and substance satisfactory to Agent.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any Environmental Law as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, (d) asbestos in any form or electrical equipment
that contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of 50 parts per million and (e) any other substance, the
storage, manufacture, disposal, treatment, generation, use, transportation,
remediation, release into or concentration in the environment of which is
prohibited, controlled, regulated or licensed by any Governmental Authority
under any Environmental Law.
"Hedge Agreement" means any and all agreements, or documents
now existing or hereafter entered into by Administrative Borrower or its
Subsidiaries that provide for an interest rate, credit, commodity or equity
swap, cap, floor, collar, forward foreign exchange transaction, currency swap,
cross currency rate swap, currency option, or any combination of, or option with
respect to, these or similar transactions, for the purpose of hedging
Administrative Borrower's or its Subsidiaries' exposure to fluctuations in
interest or exchange rates, loan, credit exchange, security or currency
valuations or commodity prices.
"Hilco" means Hilco Capital LP, a Delaware limited
partnership.
"Holdout Lender" has the meaning set forth in Section 15.2(a).
"Huck NC" means Huck Store Fixture Company of North Carolina,
a North Carolina corporation.
"Xxxx Xxxxxx" means Source-Huck Store Fixture Company, a
Delaware corporation.
"ICI" means The Interlink Companies, Inc., a Delaware
corporation.
- 21 -
"Indebtedness" means (a) all obligations for borrowed money,
(b) all obligations evidenced by bonds, debentures, notes, or other similar
instruments and all reimbursement or other obligations in respect of letters of
credit, bankers acceptances, interest rate swaps, or other financial products,
(c) all obligations as a lessee under Capital Leases, (d) all obligations or
liabilities of others secured by a Lien on any asset of a Person or its
Subsidiaries, irrespective of whether such obligation or liability is assumed,
(e) all obligations to pay the deferred purchase price of assets (other than
trade payables incurred in the ordinary course of business and repayable in
accordance with customary trade practices), (f) all obligations owing under
Hedge Agreements, and (g) any obligation guaranteeing or intended to guarantee
(whether directly or indirectly guaranteed, endorsed, co-made, discounted, or
sold with recourse) any obligation of any other Person that constitutes
Indebtedness under any of clauses (a) through (f) above.
"Indemnified Liabilities" has the meaning set forth in Section
11.3.
"Indemnified Person" has the meaning set forth in Section
11.3.
"Insolvency Proceeding" means any proceeding commenced by or
against any Person under any provision of any applicable Bankruptcy Code or
under any other state, provincial or federal bankruptcy or insolvency law,
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extensions generally with creditors, or proceedings seeking
reorganization, arrangement, or other similar relief.
"In-Store Services Accounts" means Accounts arising from goods
sold and services rendered by the In-Store Services Business Segments of the
Loan Parties.
"In-Store Services Business Segments" means, collectively, the
In-Store Services/Wire Business Segment, the In-Store Services/Claiming Business
Segment and the In-Store Services/Other Business Segment.
"In-Store Services/Claiming Accounts" means Accounts arising
from services rendered by the In-Store Services/Claiming Business Segment of the
Loan Parties.
"In-Store Services/Claiming Business Segment" means the
business and operations of the Loan Parties related to collecting rebates and
other payments on behalf of Loan Parties and retailers and related services
conducted on the Closing Date by the Subsidiaries of Parent named in Part II-B
of Schedule S-1.
"In-Store Services/Other Business Segment" means the business
and operations of the Loan Parties related to providing retail sales information
and other services to retailers conducted on the Closing Date by the
Subsidiaries of Parent named in Part II-C of Schedule S-1.
"In-Store Services Subline Amount" means an amount equal to
$22,500,000, which amount shall be reduced by $416,667 each month, each such
reduction to occur on the first day of each such month commencing on January 1,
2004, provided that the last such reduction shall occur on December 1, 2005.
Borrowers shall have the option, from time to time, to effect additional
reductions in the In-Store Services Subline Amount, provided that each such
reduction shall be in an amount which is an integral multiple of $416,667, shall
be made by
- 22 -
providing not less than five (5) Business Days' prior written notice to Agent
and shall be irrevocable. Once reduced, the In-Store Services Subline Amount may
not be increased.
"In-Store Services/Wire Business Segment" means the business
and operations of the Loan Parties related to manufacturing wire racks for
retailers and related services conducted on the Closing Date by the Subsidiaries
of Parent named in Part II-A of Schedule S-1.
"Intangible Assets" means, with respect to any Person, that
portion of the book value of all of such Person's assets that would be treated
as intangibles under GAAP.
"Intercompany Subordination Agreement" means a subordination
agreement executed and delivered by Loan Parties and each of their Subsidiaries
and Agent, the form and substance of which is satisfactory to Agent.
"Intercreditor and Collateral Agency Agreement" means the
Intercreditor and Collateral Agency Agreement dated as of October 30, 2003, by
and among Agent, the Term Loan B Agent and the Collateral Agent.
"Interest Expense" means, for any period, the aggregate of the
interest expense of Parent and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.
"Interest Period" means, with respect to each LIBOR Rate Loan,
a period commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, or 3 months thereafter; provided, however,
that (a) if any Interest Period would end on a day that is not a Business Day,
such Interest Period shall be extended (subject to clauses (c)-(e) below) to the
next succeeding Business Day, (b) interest shall accrue at the applicable rate
based upon the LIBOR Rate from and including the first day of each Interest
Period to, but excluding, the day on which any Interest Period expires, (c) any
Interest Period that would end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (d) with respect to an Interest Period that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period), the Interest Period shall end on the last Business Day of the calendar
month that is 1, 2, or 3 months after the date on which the Interest Period
began, as applicable, and (e) Borrowers (or Administrative Borrower on behalf
thereof) may not elect an Interest Period which will end after the Maturity
Date.
"Inventory" means inventory (as that term is defined in the
Code).
"Investment" means, with respect to any Person, any investment
by such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practice), purchases or other
acquisitions of Indebtedness, Stock, or all or substantially all of the assets
of such other Person (or of any
- 23 -
division or business line of such other Person), and any other items that are or
would be classified as investments on a balance sheet prepared in accordance
with GAAP.
"Investment Property" means investment property (as that term
is defined in the Code), and any and all supporting obligations in respect
thereof.
"IPD" means International Periodical Distributors, Inc., a
Nevada corporation.
"IRC" means the Internal Revenue Code of 1986, as in effect
from time to time.
"Issuing Lender" means WFF or any other Lender that, at the
request of Administrative Borrower and with the consent of Agent, agrees, in
such Lender's sole discretion, to become an Issuing Lender for the purpose of
issuing L/Cs or L/C Undertakings pursuant to Section 2.12.
"L/C" has the meaning set forth in Section 2.12(a).
"L/C Disbursement" means a payment made by the Issuing Lender
pursuant to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section
2.12(a).
"Leased Real Property" means any leasehold interests in real
property now held or hereafter acquired by a Loan Party and the improvements
thereto.
"Lender" and "Lenders" have the respective meanings set forth
in the preamble to this Agreement, and shall include any other Person made a
party to this Agreement in accordance with the provisions of Section 14.1.
"Lender Group" means, individually and collectively, each of
the Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses
(including taxes, and insurance premiums) required to be paid by a Loan Party or
its Subsidiaries under any of the Loan Documents that are paid, advanced, or
incurred by the Lender Group, (b) fees or charges paid or incurred by Agent in
connection with the Lender Group's transactions with the Loan Parties or their
Subsidiaries, including, fees or charges for photocopying, notarization,
couriers and messengers, telecommunication, public record searches (including
tax lien, litigation, and UCC and PPSA searches and including searches with the
patent and trademark office, the copyright office, or the department of motor
vehicles), filing, recording, publication, appraisal (including periodic
collateral appraisals or business valuations to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement,
real estate surveys, real estate title policies and endorsements, and
environmental audits, (c) costs and expenses incurred by Agent in the
disbursement of funds to or for the account of Borrowers or other members of the
Lender Group (by wire transfer or otherwise), (d) charges paid or incurred by
Agent resulting from the dishonor of checks, (e) reasonable costs and expenses
paid or incurred by the Lender Group to correct any default or enforce any
provision of the Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing
- 24 -
for sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) audit fees and expenses of
Agent related to audit examinations of the Books to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement,
(g) reasonable costs and expenses of third party claims or any other suit paid
or incurred by the Lender Group in enforcing or defending the Loan Documents or
in connection with the transactions contemplated by the Loan Documents or the
Lender Group's relationship with any Loan Party or any Subsidiary of a Loan
Party, (h) Agent's and each Lender's reasonable costs and expenses (including
attorneys fees) incurred in advising, structuring, drafting, reviewing,
administering, syndicating, or amending the Loan Documents, and (i) Agent's and
each Lender's reasonable costs and expenses (including attorneys, accountants,
consultants, and other advisors fees and expenses) incurred in terminating,
enforcing (including attorneys, accountants, consultants, and other advisors
fees and expenses incurred in connection with a "workout," a "restructuring," or
an Insolvency Proceeding concerning any Loan Party or any Subsidiary of a Loan
Party or in exercising rights or remedies under the Loan Documents), or
defending the Loan Documents, irrespective of whether suit is brought, or in
taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender,
such Lender, together with such Lender's Affiliates, officers, directors,
employees, attorneys, and agents.
"Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.
"Letter of Credit Usage" means, as of any date of
determination, the aggregate undrawn amount of all outstanding Letters of
Credit.
"LIBOR Deadline" has the meaning set forth in Section
2.13(b)(i).
"LIBOR Notice" means a written notice in the form of Exhibit
L-1.
"LIBOR Option" has the meaning set forth in Section 2.13(a).
"LIBOR Rate" means, for each Interest Period for each LIBOR
Rate Loan, the rate per annum determined by Agent (rounded upwards, if
necessary, to the next 1/100%) by dividing (a) the Base LIBOR Rate for such
Interest Period, by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall
be adjusted on and as of the effective day of any change in the Reserve
Percentage.
"LIBOR Rate Loan" means each portion of an Advance that bears
interest at a rate determined by reference to the LIBOR Rate.
"LIBOR Rate Margin" means the percentage points set forth
below corresponding to average Excess Availability for the three-month period
ending as of the last day of the immediately preceding month, as determined by
Agent based upon the Borrowing Base and Excess Availability calculations
delivered to Agent pursuant to Section 6.2(j) for such period:
--------------------------------------------------------------------------------------
Level Average Excess Availability LIBOR Rate Margin
--------------------------------------------------------------------------------------
I Greater than $10,000,000 3.25 percentage points
--------------------------------------------------------------------------------------
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--------------------------------------------------------------------------------------
Level Average Excess Availability LIBOR Rate Margin
--------------------------------------------------------------------------------------
II $10,000,000 or less but greater than 3.50 percentage points
or equal to $5,000,000
--------------------------------------------------------------------------------------
III Less than $5,000,000 3.75 percentage points
--------------------------------------------------------------------------------------
provided, that, notwithstanding the foregoing, (a) each adjustment to the LIBOR
Rate Margin shall be effective from the date of delivery of the Loan Parties'
Excess Availability calculation for the three-month period used to determine the
LIBOR Rate Margin until the date of delivery of such Excess Availability
calculation pursuant to Section 6.2(j) hereof for the next succeeding
three-month period, (b) if the Loan Parties fail to deliver the Excess
Availability calculation to the Agent for any three-month period in accordance
with Section 6.2(j) hereof, then until such Excess Availability calculation is
delivered, the LIBOR Rate Margin shall be set in accordance with Level III, and
(c) on and after the Closing Date and until the Excess Availability calculation
is delivered for the three-month period ending on January 31, 2004, the LIBOR
Rate Margin shall be set at Level II above.
"Lien" means any interest in an asset securing an obligation
owed to, or a claim by, any Person other than the owner of the asset,
irrespective of whether (a) such interest is based on the common law, statute,
or contract, (b) such interest is recorded or perfected, and (c) such interest
is contingent upon the occurrence of some future event or events or the
existence of some future circumstance or circumstances. Without limiting the
generality of the foregoing, the term "Lien" includes the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also includes reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Bank Product
Agreements, the Security Agreement, the Intercreditor and Collateral Agency
Agreement, the Cash Management Agreements, the Control Agreements, the Copyright
Security Agreement, the Disbursement Letter, the Due Diligence Certificate, the
Fee Letter, each Guaranty, the Validity and Support Guaranty, the Canadian
Documents, the Contribution Agreement, the Intercompany Subordination Agreement,
the Letters of Credit, the Mortgages, the Patent Security Agreement, the Pledge
Agreement, the Trademark Security Agreement, any note or notes executed by a
Borrower in connection with this Agreement and payable to a member of the Lender
Group, and any other agreement entered into, now or in the future, by a Loan
Party and the Lender Group in connection with this Agreement.
"Loan Party" means any Borrower and any Guarantor.
"Material Adverse Change" means (a) a material adverse change
in the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of an Eligible Loan Party, or
of the Loan Parties and their Subsidiaries, taken as a whole, (b) a
- 26 -
material impairment of the ability of the Loan Parties, taken as a whole, to
perform their obligations under the Loan Documents or of the Lender Group's
ability to enforce the Obligations or realize upon the Collateral, or (c) a
material impairment of the enforceability or priority of the Collateral Agent's
Liens with respect to the Collateral as a result of an action or failure to act
on the part of a Loan Party or a Subsidiary of a Loan Party.
"Material Contracts" means any agreement or contract of any
Loan Party which has a term of one year or longer and (a) involves consideration
to such Loan Party of $500,000 or more in any year, (b) involves consideration
by such Loan Party of $500,000 or more in any year, (c) imposes financial
obligations on any Loan Party of $500,000 or more in any year (other than any
agreement that by its terms may be terminated by any Loan Party or any
Subsidiary in less than one year), or (d) is otherwise material (or together
with related agreements and contracts, is material) to the business, operations,
financial condition, performance or properties of an Eligible Loan Party, or the
Loan Parties, taken as a whole, excluding, however, customer purchase orders or
purchase orders to any vendor, in each case entered into in the ordinary course
of a Loan Party's business.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Revolver Amount" means $45,000,000.
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by a
Loan Party or a Subsidiary of a Loan Party in favor of Collateral Agent, for the
benefit of the Lender Group, the Bank Product Providers and the Term Loan B
Lender Group, in form and substance satisfactory to Agent, that encumber the
Real Property Collateral and the related improvements thereto.
"Multiemployer Plan" means a "multiemployer plan" (as defined
in Section 4001(a)(3) of ERISA) or such equivalent plan under Canadian Employee
Benefit Laws to which a Loan Party, any of its Subsidiaries, or any ERISA
Affiliate has contributed, or was obligated to contribute, within the past six
years.
"Myco IRB" means the Industrial Project Revenue Bonds, Series
1995 (Myco, Inc. Project), issued pursuant to the Indenture of Trust dated as of
January 1, 0000, xxxxxxx xxx Xxxx xx Xxxxxxxx, Xxxxxxxx and Amalgamated Bank of
Chicago, as trustee and tender agent.
"Negotiable Collateral" means letters of credit, letter of
credit rights, instruments, promissory notes, drafts, documents, and chattel
paper (including electronic chattel paper and tangible chattel paper), and any
and all supporting obligations in respect thereof.
"Net Liquidation Percentage" means the percentage of the
Appraised Value of Loan Parties' Equipment that is estimated to be recoverable
in a forced liquidation of such Equipment, such percentage to be as determined
from time to time by a qualified appraisal company selected by Agent.
"Obligations" means (a) all loans (including the Term Loan),
Advances, debts, principal, interest (including any interest that, but for the
commencement of an Insolvency Proceeding, would have accrued), contingent
reimbursement obligations with respect to
- 27 -
outstanding Letters of Credit, premiums, liabilities (including all amounts
charged to Borrowers' Loan Account pursuant hereto), obligations (including
indemnification obligations), fees (including the fees provided for in the Fee
Letter), charges, costs, Lender Group Expenses (including any fees or expenses
that, but for the commencement of an Insolvency Proceeding, would have accrued),
lease payments, guaranties, covenants, and duties of any kind and description
owing by Loan Parties to the Lender Group pursuant to or evidenced by the Loan
Documents and irrespective of whether for the payment of money, whether direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including all interest not paid when due and all Lender
Group Expenses that Loan Parties are required to pay or reimburse by the Loan
Documents, by law, or otherwise, and (b) all Bank Product Obligations. Any
reference in this Agreement or in the Loan Documents to the Obligations shall
include all extensions, modifications, renewals, or alterations thereof, both
prior and subsequent to any Insolvency Proceeding.
"Originating Lender" has the meaning set forth in Section
14.1(e).
"Overadvance" has the meaning set forth in Section 2.5.
"Owned Real Property" means any fee interests in Real Property
now owned or hereafter acquired by any Loan Party and the improvements thereto.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Participant" has the meaning set forth in Section 14.1(e).
"Patent Security Agreement" means a patent security agreement
executed and delivered by each applicable Loan Party and Collateral Agent, the
form and substance of which is satisfactory to Agent.
"Pay-Off Letter" means a letter, in form and substance
satisfactory to Agent, from each Existing Lender to Agent respecting the amount
necessary to repay in full all of the obligations of the Loan Parties and their
Subsidiaries owing to such Existing Lender and obtain a release of all of the
Liens existing in favor of such Existing Lender in and to the assets of the Loan
Parties and their Subsidiaries.
"PBGC" means the Pension Benefit Guaranty Corporation as
defined in Title IV of ERISA, or any successor thereto or equivalent entity
under Canadian Employee Benefit Laws.
"Permitted Acquisition" means any Acquisition by a Loan Party
to the extent that each of the following conditions shall have been satisfied:
(a) (i) Excess Availability is at least
$15,000,000 both (A) for the 30 consecutive day period
immediately prior to the date of such Acquisition and (B)
immediately after giving effect to such Acquisition, (ii) no
Default or Event of Default shall have occurred and be
continuing immediately prior to such Acquisition or
immediately after giving effect thereto, and (iii) the
aggregate consideration payable by the Loan Parties in
connection with such Acquisition shall not exceed $1,000,000;
- 28 -
(b) (i) neither the Borrower nor any of its
Subsidiaries shall, in connection with such Acquisition,
assume or remain liable in respect of any Indebtedness of the
Seller or Sellers, or other obligation (including contingent
obligations) of the Seller or Sellers (except for obligations
incurred in the ordinary course of business in operating the
property so acquired and necessary and desirable to the
continued operation of such property and except for
Indebtedness that the Required Lenders otherwise expressly
consents to in writing after their review of the terms of the
proposed Acquisition), and (ii) all property to be so acquired
in connection with such Acquisition shall be free and clear of
any and all Liens, except for Permitted Liens (and if any such
property is subject to any Lien not permitted by this clause
(ii) then concurrently with such Acquisition such Lien shall
be released);
(c) any Subsidiary to be acquired or formed as a
result of such Acquisition shall be a Borrower or a Guarantor
(as determined by the Agent) and shall be engaged in the same
business as the other Loan Parties and such Subsidiary will be
a direct wholly-owned Subsidiary of one of the other Loan
Parties;
(d) such Acquisition shall be effected in such a
manner so that the acquired Stock or assets are owned by a
Borrower or a Guarantor (as determined by the Agent) and, if
effected by merger or consolidation involving a Borrower or a
Guarantor, a Borrower or Guarantor shall be the continuing or
surviving Person; and
(e) any such Subsidiary shall execute and
deliver the agreements, instruments and other documents
required by Section 6.15.
"Permitted Discretion" means a determination made in good
faith and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment.
"Permitted Dispositions" means (a) sales or other dispositions
of Equipment that is substantially worn, damaged, or obsolete in the ordinary
course of business, (b) sales of Inventory to buyers in the ordinary course of
business, (c) the use or transfer of money or Cash Equivalents in a manner that
is not prohibited by the terms of this Agreement or the other Loan Documents,
(d) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights,
and other intellectual property rights in the ordinary course of business, (e)
sales or other dispositions of any assets by a Borrower to any other Borrower or
by a Guarantor to any other Loan Party, and (f) the sale of the residential real
property owned by the Loan Parties located at 0000 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxx.
"Permitted Holder" means (a) Xxxxxxxx Xxxxxxx, his Family
Members, and his Family Trusts, and (b) Fidelity Management.
"Permitted Investments" means (a) Investments in cash and Cash
Equivalents, (b) Investments in negotiable instruments for collection, (c)
advances made in connection with purchases of goods or services in the ordinary
course of business, and (d) Investments received in settlement of amounts due to
a Borrower or any Subsidiary of a Borrower effected in the
- 29 -
ordinary course of business or owing to a Borrower or any Subsidiary of a
Borrower as a result of Insolvency Proceedings involving an Account Debtor or
upon the foreclosure or enforcement of any Lien in favor of a Borrower or any
Subsidiary of a Borrower.
"Permitted Liens" means (a) Liens held by Collateral Agent,
(b) Liens for unpaid taxes that either (i) are not yet delinquent, or (ii) do
not constitute an Event of Default hereunder and are the subject of Permitted
Protests, (c) Liens set forth on Schedule P-1, (d) the interests of lessors
under operating leases, (e) purchase money Liens or the interests of lessors
under Capital Leases to the extent that such Liens or interests secure Permitted
Purchase Money Indebtedness and so long as such Lien attaches only to the asset
purchased or acquired and the proceeds thereof, (f) Liens arising by operation
of law in favor of warehousemen, landlords, carriers, mechanics, materialmen,
laborers, or suppliers, incurred in the ordinary course of Borrowers' business
and not in connection with the borrowing of money, and which Liens either (i)
are for sums not yet delinquent, or (ii) are the subject of Permitted Protests,
(g) Liens arising from deposits made in connection with obtaining worker's
compensation or other unemployment insurance, (h) Liens or deposits to secure
performance of bids, tenders, or leases incurred in the ordinary course of
business and not in connection with the borrowing of money, (i) Liens granted as
security for surety or appeal bonds in connection with obtaining such bonds in
the ordinary course of business, (j) Liens resulting from any judgment or award
that is not an Event of Default hereunder, and (k) with respect to any Real
Property, easements, rights of way, and zoning restrictions that do not
materially interfere with or impair the use or operation thereof.
"Permitted Protest" means the right of Administrative Borrower
or any of its Subsidiaries to protest any Lien (other than any Lien that secures
the Obligations), taxes (other than payroll taxes or taxes that are the subject
of a United States or Canadian federal or provincial tax lien), or rental
payment, provided that (a) a reserve with respect to such obligation is
established on the Books in such amount as is required under GAAP, (b) any such
protest is instituted promptly and prosecuted diligently by Administrative
Borrower or any of its Subsidiaries, as applicable, in good faith, and (c) Agent
is satisfied that, while any such protest is pending, there will be no
impairment of the enforceability, validity, or priority of any of the Collateral
Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date
of determination, Purchase Money Indebtedness incurred after the Closing Date in
an aggregate amount outstanding at any one time not in excess of $250,000.
"Person" means natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint ventures, trusts, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than
Real Property.
"Plan" means any employee benefit plan, program, or
arrangement maintained or contributed to by a Loan Party or with respect to
which it may incur liability subject to ERISA.
- 30 -
"Pledge Agreement" means a pledge and security agreement, in
form and substance satisfactory to Agent, executed and delivered by each Loan
Party (including the Parent) that owns Stock of a Subsidiary of Parent or that
is the holder of any promissory note, in favor of the Collateral Agent for the
benefit of the Lender Group, the Bank Product Providers and the Term Loan B
Lender Group.
"PPSA" means the Personal Property Security Act of the
applicable Canadian province or provinces in respect of the Canadian Guarantors.
"Program Contracts" means the standard form agreements used by
the Loan Parties in connection with (i) their Advance Pay, Double Advance Pay
and Standard RDA Service Programs for collection of retail display allowances in
the In-Store Services/Claiming Business Segment and (ii) their Front-End
Merchandiser Programs for sales of display fixtures in the In-Store
Services/Wire Business Segment.
"Projections" means Parent's forecasted (a) balance sheets,
(b) profit and loss statements, and (c) cash flow statements, all prepared on a
consistent basis with Parent's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means, as of any date of determination:
(a) with respect to a Lender's obligation to
make Advances and receive payments of principal, interest, fees, costs,
and expenses with respect thereto, (i) prior to the Revolver
Commitments being terminated or reduced to zero, the percentage
obtained by dividing (y) such Lender's Revolver Commitment, by (z) the
aggregate Revolver Commitments of all Lenders, and (ii) from and after
the time that the Revolver Commitments have been terminated or reduced
to zero, the percentage obtained by dividing (y) the aggregate
outstanding principal amount of such Lender's Advances by (z) the
aggregate outstanding principal amount of all Advances,
(b) with respect to a Lender's obligation to
participate in Letters of Credit, to reimburse the Issuing Lender, and
to receive payments of fees with respect thereto, (i) prior to the
Revolver Commitments being terminated or reduced to zero, the
percentage obtained by dividing (y) such Lender's Revolver Commitment,
by (z) the aggregate Revolver Commitments of all Lenders, and (ii) from
and after the time that the Revolver Commitments have been terminated
or reduced to zero, the percentage obtained by dividing (y) the
aggregate outstanding principal amount of such Lender's Advances by (z)
the aggregate outstanding principal amount of all Advances,
(c) with respect to a Lender's obligation to
make the Term Loan and receive payments of interest, fees, and
principal with respect thereto, (i) prior to the making of the Term
Loan, the percentage obtained by dividing (y) such Lender's Term Loan
Commitment, by (z) the aggregate amount of all Lenders' Term Loan
Commitments, and (ii) from and after the making of the Term Loan, the
percentage obtained by dividing (y) the principal amount of such
Lender's portion of the Term Loan by (z) the principal amount of the
Term Loan, and
- 31 -
(d) with respect to all other matters as to a
particular Lender (including the indemnification obligations arising
under Section 16.7), the percentage obtained by dividing (i) such
Lender's Revolver Commitment plus the outstanding principal amount of
such Lender's portion of the Term Loan, by (ii) the aggregate amount of
Revolver Commitments of all Lenders plus the outstanding principal
amount of the Term Loan; provided, however, that in the event the
Revolver Commitments have been terminated or reduced to zero, Pro Rata
Share under this clause shall be the percentage obtained by dividing
(A) the outstanding principal amount of such Lender's Advances plus
such Lender's ratable portion of the Risk Participation Liability with
respect to outstanding Letters of Credit plus the outstanding principal
amount of such Lender's portion of the Term Loan, by (B) the
outstanding principal amount of all Advances plus the aggregate amount
of the Risk Participation Liability with respect to outstanding Letters
of Credit plus the outstanding principal amount of the Term Loan.
"Purchase Money Indebtedness" means Indebtedness (other than
the Obligations, but including Capitalized Lease Obligations), incurred at the
time of, or within 20 days after, the acquisition of any fixed assets for the
purpose of financing all or any part of the acquisition cost thereof.
"Qualified Cash" means, as of any date of determination, the
amount of unrestricted cash and Cash Equivalents of Borrowers and their
Subsidiaries that is paid to Agent by wire transfer in immediately available
funds on or prior to the Closing Date for deposit into the Agent's Account.
"Real Property" means any estates or interests in real
property now owned or hereafter acquired by any Loan Party or a Subsidiary of
any Loan Party and the improvements thereto.
"Real Property Collateral" means the parcel or parcels of Real
Property identified on Schedule R-1 and any Real Property hereafter acquired by
a Loan Party or any Subsidiary of a Loan Party.
"Record" means information that is inscribed on a tangible
medium or which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Remedial Action" means all actions taken to (a) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate, or in any way
address Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC Section 9601.
"Rent Reserve" means a reserve in the amount of three-months
rent established by Agent for each Leased Real Property location set forth in
Schedule L-1, provided that the reserve established for any such location shall
be reduced to zero on the date that Collateral Agent shall receive a Collateral
Access Agreement for such location.
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"Replacement Lender" has the meaning set forth in Section
15.2(a).
"Report" has the meaning set forth in Section 16.17.
"Reportable Event" means any of the events described in
Section 4043(c) of ERISA or the regulations thereunder other than a Reportable
Event as to which the provision of 30 days' notice to the PBGC is waived under
applicable regulations.
"Required Availability" means that the sum of (a) Excess
Availability (without giving effect to clause (y) of the definition thereof),
plus (b) Qualified Cash, exceeds $7,500,000.
"Required Lenders" means, at any time, Lenders whose aggregate
Pro Rata Shares (calculated under clause (d) of the definition of Pro Rata
Shares) equal or exceed 66-2/3%.
"Reserve Percentage" means, on any day, for any Lender, the
maximum percentage prescribed by the Board of Governors of the Federal Reserve
System (or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"Revolver Commitment" means, with respect to each Lender, its
Revolver Commitment, and, with respect to all Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or in the Assignment
and Acceptance pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 14.1.
"Revolver Usage" means, as of any date of determination, the
sum of (a) the then extant amount of outstanding Advances, plus (b) the then
extant amount of the Letter of Credit Usage.
"Risk Participation Liability" means, as to each Letter of
Credit, all reimbursement obligations of Borrowers to the Issuing Lender with
respect to an L/C Undertaking, consisting of (a) the amount available to be
drawn or which may become available to be drawn, (b) all amounts that have been
paid by the Issuing Lender to the Underlying Issuer to the extent not reimbursed
by Borrowers, whether by the making of an Advance or otherwise, and (c) all
accrued and unpaid interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange
Commission and any successor thereto.
"Securities Account" means a "securities account" as that term
is defined in the Code.
"Security Agreement" means a security agreement, in form and
substance satisfactory to Agent, executed and delivered by each Loan Party
(including the Parent), other
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than a Canadian Guarantor, in favor of Collateral Agent for the benefit of
Lender Group, the Bank Product Providers and the Term Loan B Lender Group.
"Seller" means any Person that sells Stock or other property
or assets to a Loan Party or a Subsidiary of a Loan Party in a Permitted
Acquisition.
"Senior Debt" means, at any date, the sum of (x) the Revolver
Usage at such date, plus (y) the aggregate outstanding principal amount of the
Term Loan at such date, plus (z) the aggregate outstanding principal amount of
the Term Loan B at such date.
"Senior Debt Ratio" means, at any date, the ratio of (i)
Senior Debt at such date, to (ii) EBITDA for the trailing four fiscal quarters
most recently ended on or prior to such date.
"Settlement" has the meaning set forth in Section 2.3(f)(i).
"Settlement Date" has the meaning set forth in Section
2.3(f)(i).
"Solvent" means, with respect to any Person on a particular
date, that, at fair valuations, the sum of such Person's assets is greater than
all of such Person's debts.
"Specified Tax Refunds" means the tax refunds expected to be
received by the Loan Parties from the taxing authorities for the Fiscal Years
and in the approximate amounts, in each case set forth on Schedule S-2.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Subordinated Indebtedness" means unsecured Indebtedness of
any Loan Party which has been expressly subordinated in right of payment to all
Indebtedness of such Loan Party under the Loan Documents by the execution and
delivery of a subordination agreement, in form and substance satisfactory to the
Required Lenders, which Indebtedness is on terms and conditions (including,
without limitation, payment terms, interest rates, covenants, defaults and other
material terms) satisfactory to Required Lenders.
"Subsidiary" of a Person means a corporation, partnership,
limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power to
elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or other
entity.
"Swing Lender" means WFF or any other Lender that, at the
request of Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become the Swing Lender under Section 2.3(d).
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
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"Syndicated Amount" has the meaning set forth in Section
3.2(b).
"Taxes" has the meaning set forth in Section 16.11.
"Term Loan" has the meaning set forth in Section 2.2.
"Term Loan Amount" means the lesser of (a) $5,000,000, and (b)
the sum of:
(i) 80% times the Net Liquidation Percentage times the
Appraised Value of Eligible Equipment, and
(ii) 50% of the Appraised Value of Eligible Real Property
Collateral, less the amount, if any, of reserves
established by Agent, for potential environmental
remediation costs relating to such Eligible Real
Property Collateral.
"Term Loan B" means a term loan in an aggregate principal
amount of $15,000,000, made by the Term Loan B Lenders to the Borrowers on the
Closing Date pursuant to the Term Loan B Loan Agreement.
"Term Loan B Agent" means Hilco, in its capacity as agent for
the Term Loan B Lenders, and any successor in such capacity.
"Term Loan B Event of Default" means an "Event of Default", as
such term is defined in the Term Loan B Loan Agreement.
"Term Loan B Lender Group" means the Term Loan B Lenders and
the Term Loan B Agent.
"Term Loan B Lenders" means the lenders from time to time
party to the Term Loan B Loan Agreement.
"Term Loan B Loan Agreement" means the Loan Agreement dated as
of October 30, 2003, by and among the Borrowers, the Term Loan B Lenders and the
Term Loan B Agent.
"Term Loan B Loan Documents" means the "Loan Documents", as
such term is defined in the "Term Loan B Loan Agreement.
"Term Loan Commitment" means, with respect to each Lender, its
Term Loan Commitment, and, with respect to all Lenders, their Term Loan
Commitments, in each case as such Dollar amounts are set forth beside such
Lender's name under the applicable heading on Schedule C-1 or in the Assignment
and Acceptance pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 14.1.
"Termination Event" means (i) a Reportable Event with respect
to any Benefit Plan, (ii) any event that causes any Loan Party or any of its
ERISA Affiliates to incur liability under Section 409, 502(i), 502(l), 515,
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section
- 35 -
4971 or 4975 of the IRC, (iii) the filing of a notice of intent to terminate a
Benefit Plan or the treatment of a Benefit Plan amendment as a termination under
Section 4041 of ERISA, (iv) the institution of proceedings by the PBGC to
terminate a Benefit Plan, (v) any other event or condition which might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan, or (vi) any equivalent
event, action, condition, proceeding or otherwise under Canadian Employee
Benefit Laws.
"Total Commitment" means, with respect to each Lender, its
Total Commitment, and, with respect to all Lenders, their Total Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 attached hereto or on the signature page
of the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Total Debt Ratio" means, at any date, the ratio of (i) the
sum of (A) Senior Debt at such date, plus (B) the aggregate outstanding
principal amount of all other Indebtedness of the Parent and its Subsidiaries at
such date, to (ii) EBITDA for the trailing twelve-month period most recently
ended on or prior to such date.
"Trademark Security Agreement" means a trademark security
agreement executed and delivered by each applicable Loan Party and Collateral
Agent, the form and substance of which is satisfactory to Agent.
"UCC Filing Authorization Letter" means a letter duly executed
by each Loan Party authorizing Collateral Agent to file appropriate financing
statements on Form UCC-1 without the signature of such Loan Party, in such
office or offices as may be necessary or, in the opinion of Agent, desirable to
perfect the security interests purported to be created by the Loan Documents.
"Underlying Issuer" means a third Person which is the
beneficiary of an L/C Undertaking and which has issued a letter of credit at the
request of the Issuing Lender for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of credit that
has been issued by an Underlying Issuer.
"United States" means the United States of America.
"US Marketing Services" means Source-U.S. Marketing Services,
Inc., a Delaware corporation.
"Validity and Support Guaranty" means each Validity and
Support Guaranty made by S. Xxxxxx Xxxxxx, Xxxxx X. Xxxxxx, Xxxx Xxxx and Xxxx
Xxxxxxx in favor of Agent, the form and substance of which is satisfactory to
Agent.
"Voidable Transfer" has the meaning set forth in Section 17.7.
"Xxxxx Fargo" means Xxxxx Fargo Bank, National Association, a
national banking association.
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"Wood Manufacturing Accounts" means Accounts arising from
goods sold and services rendered by the Wood Manufacturing Business Segments of
the Loan Parties.
"Wood Manufacturing Business Segments" means the Wood
Manufacturing/Quincy Business Segment and the Wood Manufacturing/NC Business
Segment.
"Wood Manufacturing/NC Business Segment" means the business
and operations of the Loan Parties related to designing and manufacturing custom
wood and wire displays for periodicals conducted on the Closing Date by the
Subsidiaries of Parent named in Part III-A of Schedule S-1.
"Wood Manufacturing/Quincy Business Segment" means the
business and operations of the Loan Parties related to designing and
manufacturing custom wood and wire displays for periodicals conducted on the
Closing Date by the Subsidiaries of Parent named in Part III-B of Schedule S-1.
"WFF" means Xxxxx Fargo Foothill, Inc., a California
corporation.
"WFF Availability" means, as of any date of determination, an
amount equal to 45% of the most recently determined Enterprise Value of the Loan
Parties.
"WFF Debt" means, at any date, the sum of (x) the Maximum
Revolver Amount, plus (y) the aggregate outstanding principal amount of the Term
Loan at such date.
"WFF Debt Ratio" means, at any date, the ratio of (i) WFF Debt
at such date, to (ii) EBITDA for the trailing four fiscal quarters most recently
ended on or prior to such date.
"Yaqui" means Yaqui Investment Limited.
"Yaqui Lien Reserve" means a reserve established by Agent
against the Borrowing Base in the amount of $2,447,401.77, plus interest on such
amount accruing from September 30, 2003 at a rate per annum of 12%, such reserve
to be reduced to zero on the date that Yaqui terminates its Liens on the
Collateral and authorizes Collateral Agent to file UCC-3 termination statements
for each UCC-1 financing statement filed by Yaqui against any portion of the
Collateral.
"Zoning Letters" has the meaning set forth in Section 3.2(j).
"3-Month Dilution" means, for each Business Segment, as of any
date of determination, a percentage, based upon the experience of the
three-month period ending as of the last day of the immediately preceding fiscal
month which is the result of dividing the Dollar amount of (a) bad debt
write-downs, discounts, advertising allowances, credits, profit sharing
deductions or other dilutive items with respect to Loan Parties' Accounts for
such Business Segment during such period, by (b) Loan Parties' xxxxxxxx with
respect to Accounts for such Business Segment during such period.
"12-Month Dilution" means, for each Business Segment, as of
any date of determination, a percentage, based upon the experience of the
twelve-month period ending as of
- 37 -
the last day of the immediately preceding fiscal month which is the result of
dividing the Dollar amount of (a) bad debt write-downs, discounts, advertising
allowances, credits, profit sharing deductions or other dilutive items with
respect to Loan Parties' Accounts for such Business Segment during such period,
by (b) Loan Parties' xxxxxxxx with respect to Accounts for such Business Segment
during such period.
1.2. ACCOUNTING TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP. When
used herein, the term "financial statements" shall include the notes and
schedules thereto. Whenever the term "Borrowers" or the term "Parent" is used in
respect of a financial covenant or a related definition, it shall be understood
to mean Parent and its Subsidiaries on a consolidated basis unless the context
clearly requires otherwise.
1.3. CODE. Any terms used in this Agreement that are
defined in the Code shall be construed and defined as set forth in the Code
unless otherwise defined herein.
1.4. CONSTRUCTION. Unless the context of this Agreement or
any other Loan Document clearly requires otherwise, references to the plural
include the singular, references to the singular include the plural, the term
"including" is not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in the other Loan
Documents to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein to the
repayment in full of the Obligations shall mean the repayment in full in cash of
all Obligations other than contingent indemnification Obligations and other than
any Bank Product Obligations that, at such time, are allowed by the applicable
Bank Product Provider to remain outstanding and are not required to be repaid or
cash collateralized pursuant to the provisions of this Agreement. Any reference
herein to any Person shall be construed to include such Person's successors and
assigns. Any requirement of a writing contained herein or in the other Loan
Documents shall be satisfied by the transmission of a Record and any Record
transmitted shall constitute a representation and warranty as to the accuracy
and completeness of the information contained therein.
1.5. SCHEDULES AND EXHIBITS. All of the schedules and
exhibits attached to this Agreement shall be deemed incorporated herein by
reference.
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2. LOAN AND TERMS OF PAYMENT.
2.1. REVOLVER ADVANCES.
(a) Subject to the terms and conditions of this
Agreement, and during the term of this Agreement, each Lender with a Revolver
Commitment agrees (severally, not jointly or jointly and severally) to make
advances ("Advances") to Borrowers in an amount at any one time outstanding not
to exceed such Lender's Pro Rata Share of an amount equal to the lesser of (i)
the Maximum Revolver Amount less the Letter of Credit Usage, or (ii) the
Borrowing Base less the Letter of Credit Usage.
(b) Anything to the contrary in this Section 2.1
notwithstanding, Agent shall have the right to establish reserves in such
amounts, and with respect to such matters, as Agent in its Permitted Discretion
shall deem necessary or appropriate, against the Borrowing Base, including
reserves with respect to (i) sums that the Loan Parties are required to pay
(such as taxes, assessments, insurance premiums, or, in the case of leased
assets, rents or other amounts payable under such leases) and has failed to pay
under any Section of this Agreement or any other Loan Document, (ii) amounts
owing by the Loan Parties or their Subsidiaries to any Person to the extent
secured by a Lien on, or trust over, any of the Collateral (other than any
existing Permitted Lien set forth on Schedule P-1 which is specifically
identified thereon as entitled to have priority over the Collateral Agent's
Liens), which Lien or trust, in the Permitted Discretion of Agent likely would
have a priority superior to the Collateral Agent's Liens (such as Liens or
trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen,
laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or
other taxes where given priority under applicable law) in and to such item of
the Collateral, and (iii) any deterioration in the financial condition or credit
quality of Xxxxxx and Xxxxx or Borders, or any other major customer.
(c) The Lenders with Revolver Commitments shall
have no obligation to make additional Advances hereunder to the extent such
additional Advances would cause the Revolver Usage to exceed the Maximum
Revolver Amount.
(d) Amounts borrowed pursuant to this Section
2.1 may be repaid and, subject to the terms and conditions of this Agreement,
reborrowed at any time during the term of this Agreement.
2.2. TERM LOAN. Subject to the terms and conditions of
this Agreement, on the Closing Date each Lender with a Term Loan Commitment
agrees (severally, not jointly or jointly and severally) to make term loans
(collectively, the "Term Loan") to Borrowers in an amount equal to such Lender's
Pro Rata Share of the Term Loan Amount. The Term Loan shall be repaid in 60
consecutive installments, each in the amount of $83,333 and due and payable on
the first day of each month, commencing on December 1, 2003. The outstanding
unpaid principal balance and all accrued and unpaid interest under the Term Loan
shall be due and payable on the date of termination of this Agreement, whether
by its terms, by prepayment, or by acceleration. All amounts outstanding under
the Term Loan shall constitute Obligations. Borrowers may, at any time, prepay
all or a portion of the Term Loan, subject to the payment of the Applicable
Prepayment Premium to the extent required by Section 3.6. Each prepayment
- 39 -
shall be applied against the remaining installments of principal due on the Term
Loan in the inverse order of maturity.
2.3. BORROWING PROCEDURES AND SETTLEMENTS.
(a) PROCEDURE FOR BORROWING. Each Borrowing
shall be made by an irrevocable written request by an Authorized Person
delivered to Agent (which notice must be received by Agent no later than 10:00
a.m. (California time) on the Business Day prior to the date that is the
requested Funding Date specifying (i) the amount of such Borrowing, and (ii) the
requested Funding Date, which shall be a Business Day; provided, however, that
in the case of a request for Swing Loan in an amount of $4,500,000, or less,
such notice will be timely received if it is received by Agent no later than
10:00 a.m. (California time) on the Business Day that is the requested Funding
Date). At Agent's election, in lieu of delivering the above-described written
request, any Authorized Person may give Agent telephonic notice of such request
by the required time. In such circumstances, Borrowers agree that any such
telephonic notice will be confirmed in writing within 24 hours of the giving of
such notice and the failure to provide such written confirmation shall not
affect the validity of the request.
(b) AGENT'S ELECTION. Promptly after receipt of
a request for a Borrowing pursuant to Section 2.3(a), Agent shall elect, in its
discretion, (i) to have the terms of Section 2.3(c) apply to such requested
Borrowing, or (ii) if the Borrowing is for an Advance, to request Swing Lender
to make a Swing Loan pursuant to the terms of Section 2.3(d) in the amount of
the requested Borrowing; provided, however, that if Swing Lender declines in its
sole discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall
elect to have the terms of Section 2.3(c) apply to such requested Borrowing.
(c) MAKING OF LOANS.
(i) In the event that Agent shall elect to have
the terms of this Section 2.3(c) apply to a requested Borrowing as
described in Section 2.3(b), then promptly after receipt of a request
for a Borrowing pursuant to Section 2.3(a), Agent shall notify the
Lenders, not later than 1:00 p.m. (California time) on the Business Day
immediately preceding the Funding Date applicable thereto, by telecopy,
telephone, or other similar form of transmission, of the requested
Borrowing. Each Lender shall make the amount of such Lender's Pro Rata
Share of the requested Borrowing available to Agent in immediately
available funds, to Agent's Account, not later than 10:00 a.m.
(California time) on the Funding Date applicable thereto. After Agent's
receipt of the proceeds of such Advances (or the Term Loan, as
applicable), Agent shall make the proceeds thereof available to
Administrative Borrower on the applicable Funding Date by transferring
immediately available funds equal to such proceeds received by Agent to
Administrative Borrower's Designated Account; provided, however, that,
subject to the provisions of Section 2.3(i), Agent shall not request
any Lender to make, and no Lender shall have the obligation to make,
any Advance (or its portion of the Term Loan) if Agent shall have
actual knowledge that (1) one or more of the applicable conditions
precedent set forth in Section 3 will not be satisfied on the requested
Funding Date for the applicable Borrowing unless such condition has
been waived, or (2) the requested Borrowing would exceed the
Availability on such Funding Date.
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(ii) Unless Agent receives notice from a Lender
on or prior to the Closing Date or, with respect to any Borrowing after
the Closing Date, prior to 9:00 a.m. (California time) on the date of
such Borrowing, that such Lender will not make available as and when
required hereunder to Agent for the account of Borrowers the amount of
that Lender's Pro Rata Share of the Borrowing, Agent may assume that
each Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but
shall not be so required), in reliance upon such assumption, make
available to Borrowers on such date a corresponding amount. If and to
the extent any Lender shall not have made its full amount available to
Agent in immediately available funds and Agent in such circumstances
has made available to Borrowers such amount, that Lender shall on the
Business Day following such Funding Date make such amount available to
Agent, together with interest at the Defaulting Lender Rate for each
day during such period. A notice submitted by Agent to any Lender with
respect to amounts owing under this subsection shall be conclusive,
absent manifest error. If such amount is so made available, such
payment to Agent shall constitute such Lender's Advance (or portion of
the Term Loan, as applicable) on the date of Borrowing for all purposes
of this Agreement. If such amount made available by Agent to Borrowers
is not made available to Agent by such Lender on the Business Day
following the Funding Date, Agent will notify Administrative Borrower
of such failure to fund and, upon demand by Agent, Borrowers shall pay
such amount to Agent for Agent's account, together with interest
thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to the
Advances (or portion of the Term Loan, as applicable) composing such
Borrowing. The failure of any Lender to make any Advance (or portion of
the Term Loan, as applicable) on any Funding Date shall not relieve any
other Lender of any obligation hereunder to make an Advance (or portion
of the Term Loan, as applicable) on such Funding Date, but no Lender
shall be responsible for the failure of any other Lender to make the
Advance to be made by such other Lender on any Funding Date.
(iii) Agent shall not be obligated to transfer to
a Defaulting Lender any payments made by Borrowers to Agent for the
Defaulting Lender's benefit, and, in the absence of such transfer to
the Defaulting Lender, Agent shall transfer any such payments to each
other non-Defaulting Lender member of the Lender Group ratably in
accordance with their Commitments (but only to the extent that such
Defaulting Lender's Advance was funded by the other members of the
Lender Group) or, if so directed by Administrative Borrower and if no
Default or Event of Default had occurred and is continuing (and to the
extent such Defaulting Lender's Advance was not funded by the Lender
Group), retain same to be re-advanced to Borrowers as if such
Defaulting Lender had made Advances to Borrowers. Subject to the
foregoing, Agent may hold and, in its Permitted Discretion, re-lend to
Borrowers for the account of such Defaulting Lender the amount of all
such payments received and retained by Agent for the account of such
Defaulting Lender. Solely for the purposes of voting or consenting to
matters with respect to the Loan Documents, such Defaulting Lender
shall be deemed not to be a "Lender" and such Lender's Commitment shall
be deemed to be zero. This Section shall remain effective with respect
to such Lender until (x) the Obligations under this Agreement shall
have been declared or shall have become immediately due and payable,
(y) the non-Defaulting Lenders, Agent, and Administrative Borrower
shall have waived
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such Defaulting Lender's default in writing, or (z) the Defaulting
Lender makes its Pro Rata Share of the applicable Advance and pays to
Agent all amounts owing by Defaulting Lender in respect thereof. The
operation of this Section shall not be construed to increase or
otherwise affect the Commitment of any Lender, to relieve or excuse the
performance by such Defaulting Lender or any other Lender of its duties
and obligations hereunder, or to relieve or excuse the performance by
Borrowers of their duties and obligations hereunder to Agent or to the
Lenders other than such Defaulting Lender. Any such failure to fund by
any Defaulting Lender shall constitute a material breach by such
Defaulting Lender of this Agreement and shall entitle Administrative
Borrower at its option, upon written notice to Agent, to arrange for a
substitute Lender to assume the Commitment of such Defaulting Lender,
such substitute Lender to be acceptable to Agent. In connection with
the arrangement of such a substitute Lender, the Defaulting Lender
shall have no right to refuse to be replaced hereunder, and agrees to
execute and deliver a completed form of Assignment and Acceptance in
favor of the substitute Lender (and agrees that it shall be deemed to
have executed and delivered such document if it fails to do so) subject
only to being repaid its share of the outstanding Obligations (other
than Bank Product Obligations, but including an assumption of its Pro
Rata Share of the Risk Participation Liability) without any premium or
penalty of any kind whatsoever; provided however, that any such
assumption of the Commitment of such Defaulting Lender shall not be
deemed to constitute a waiver of any of the Lender Groups' or
Borrowers' rights or remedies against any such Defaulting Lender
arising out of or in relation to such failure to fund.
(d) MAKING OF SWING LOANS.
(i) In the event Agent shall elect, with the
consent of Swing Lender, as a Lender, to have the terms of this Section
2.3(d) apply to a requested Borrowing as described in Section 2.3(b),
Swing Lender as a Lender shall make such Advance in the amount of such
Borrowing (any such Advance made solely by Swing Lender as a Lender
pursuant to this Section 2.3(d) being referred to as a "Swing Loan" and
such Advances being referred to collectively as "Swing Loans")
available to Borrowers on the Funding Date applicable thereto by
transferring immediately available funds to Administrative Borrower's
Designated Account. Each Swing Loan shall be deemed to be an Advance
hereunder and shall be subject to all the terms and conditions
applicable to other Advances, except that no such Swing Loan shall be
eligible to be a LIBOR Rate Loan and all payments on any Swing Loan
shall be payable to Swing Lender as a Lender solely for its own account
(and for the account of the holder of any participation interest with
respect to such Swing Loan). Subject to the provisions of Section
2.3(i), Agent shall not request Swing Lender as a Lender to make, and
Swing Lender as a Lender shall not make, any Swing Loan if Agent has
actual knowledge that (i) one or more of the applicable conditions
precedent set forth in Section 3 will not be satisfied on the requested
Funding Date for the applicable Borrowing unless such condition has
been waived, or (ii) the requested Borrowing would exceed the
Availability on such Funding Date. Swing Lender as a Lender shall not
otherwise be required to determine whether the applicable conditions
precedent set forth in Section 3 have been satisfied on the Funding
Date applicable thereto prior to making, in its sole discretion, any
Swing Loan.
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(ii) The Swing Loans shall be secured by the
Collateral Agent's Liens, constitute Obligations hereunder, and bear
interest at the rate applicable from time to time to Advances that are
Base Rate Loans.
(e) AGENT ADVANCES.
(i) Agent hereby is authorized by Borrowers and
the Lenders, from time to time in Agent's sole discretion, (1) after
the occurrence and during the continuance of a Default or an Event of
Default, or (2) at any time that any of the other applicable conditions
precedent set forth in Section 3 have not been satisfied, to make
Advances to Borrowers on behalf of the Lenders that Agent, in its
Permitted Discretion deems necessary or desirable (A) to preserve or
protect the Collateral, or any portion thereof, (B) to enhance the
likelihood of repayment of the Obligations (other than the Bank Product
Obligations), or (C) to pay any other amount chargeable to Borrowers
pursuant to the terms of this Agreement, including Lender Group
Expenses and the costs, fees, and expenses described in Section 10 (any
of the Advances described in this Section 2.3(e) shall be referred to
as "Agent Advances"). Each Agent Advance shall be deemed to be an
Advance hereunder, except that no such Agent Advance shall be eligible
to be a LIBOR Rate Loan and all payments thereon shall be payable to
Agent solely for its own account.
(ii) The Agent Advances shall be repayable on
demand, secured by the Collateral Agent's Liens granted to Agent under
the Loan Documents, constitute Obligations hereunder, and bear interest
at the rate applicable from time to time to Advances that are Base Rate
Loans.
(f) SETTLEMENT. It is agreed that each Lender's
funded portion of the Advances is intended by the Lenders to equal, at all
times, such Lender's Pro Rata Share of the outstanding Advances. Such agreement
notwithstanding, Agent, Swing Lender, and the other Lenders agree (which
agreement shall not be for the benefit of or enforceable by Borrowers) that in
order to facilitate the administration of this Agreement and the other Loan
Documents, settlement among them as to the Advances, the Swing Loans, and the
Agent Advances shall take place on a periodic basis in accordance with the
following provisions:
(i) Agent shall request settlement
("Settlement") with the Lenders on a weekly basis, or on a more
frequent basis if so determined by Agent, (1) on behalf of Swing
Lender, with respect to each outstanding Swing Loan, (2) for itself,
with respect to each Agent Advance, and (3) with respect to Borrowers'
or their Subsidiaries' Collections received, as to each by notifying
the Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 2:00 p.m.
(California time) on the Business Day immediately prior to the date of
such requested Settlement (the date of such requested Settlement being
the "Settlement Date"). Such notice of a Settlement Date shall include
a summary statement of the amount of outstanding Advances, Swing Loans,
and Agent Advances for the period since the prior Settlement Date.
Subject to the terms and conditions contained herein (including Section
2.3(c)(iii)): (y) if a Lender's balance of the Advances (including
Swing Loans and Agent Advances) exceeds such Lender's Pro Rata Share of
the Advances (including Swing Loans and
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Agent Advances) as of a Settlement Date, then Agent shall, by no later
than 12:00 p.m. (California time) on the Settlement Date, transfer in
immediately available funds to a Deposit Account of such Lender (as
such Lender may designate), an amount such that each such Lender shall,
upon receipt of such amount, have as of the Settlement Date, its Pro
Rata Share of the Advances (including Swing Loans and Agent Advances),
and (z) if a Lender's balance of the Advances (including Swing Loans
and Agent Advances) is less than such Lender's Pro Rata Share of the
Advances (including Swing Loans and Agent Advances) as of a Settlement
Date, such Lender shall no later than 12:00 p.m. (California time) on
the Settlement Date transfer in immediately available funds to the
Agent's Account, an amount such that each such Lender shall, upon
transfer of such amount, have as of the Settlement Date, its Pro Rata
Share of the Advances (including Swing Loans and Agent Advances). Such
amounts made available to Agent under clause (z) of the immediately
preceding sentence shall be applied against the amounts of the
applicable Swing Loans or Agent Advances and, together with the portion
of such Swing Loans or Agent Advances representing Swing Lender's Pro
Rata Share thereof, shall constitute Advances of such Lenders. If any
such amount is not made available to Agent by any Lender on the
Settlement Date applicable thereto to the extent required by the terms
hereof, Agent shall be entitled to recover for its account such amount
on demand from such Lender together with interest thereon at the
Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of
the Advances, Swing Loans, and Agent Advances is less than, equal to,
or greater than such Lender's Pro Rata Share of the Advances, Swing
Loans, and Agent Advances as of a Settlement Date, Agent shall, as part
of the relevant Settlement, apply to such balance the portion of
payments actually received in good funds by Agent with respect to
principal, interest, fees payable by Borrowers and allocable to the
Lenders hereunder, and proceeds of Collateral. To the extent that a net
amount is owed to any such Lender after such application, such net
amount shall be distributed by Agent to that Lender as part of such
next Settlement.
(iii) Between Settlement Dates, Agent, to the
extent no Agent Advances or Swing Loans are outstanding, may pay over
to Swing Lender any payments received by Agent, that in accordance with
the terms of this Agreement would be applied to the reduction of the
Advances, for application to Swing Lender's Pro Rata Share of the
Advances. If, as of any Settlement Date, Collections of Borrowers or
their Subsidiaries received since the then immediately preceding
Settlement Date have been applied to Swing Lender's Pro Rata Share of
the Advances other than to Swing Loans, as provided for in the previous
sentence, Swing Lender shall pay to Agent for the accounts of the
Lenders, and Agent shall pay to the Lenders, to be applied to the
outstanding Advances of such Lenders, an amount such that each Lender
shall, upon receipt of such amount, have, as of such Settlement Date,
its Pro Rata Share of the Advances. During the period between
Settlement Dates, Swing Lender with respect to Swing Loans, Agent with
respect to Agent Advances, and each Lender (subject to the effect of
letter agreements between Agent and individual Lenders) with respect to
the Advances other than Swing Loans and Agent Advances, shall be
entitled to interest at the applicable rate or rates payable under this
Agreement on the daily amount of funds employed by Swing Lender, Agent,
or the Lenders, as applicable.
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(g) NOTATION. Agent shall record on its books
the principal amount of the Advances (or portion of the Term Loan, as
applicable) owing to each Lender, including the Swing Loans owing to Swing
Lender, and Agent Advances owing to Agent, and the interests therein of each
Lender, from time to time and such records shall, absent manifest error,
conclusively be presumed to be correct and accurate. In addition, each Lender is
authorized, at such Lender's option, to note the date and amount of each payment
or prepayment of principal of such Lender's Advances in its books and records,
including computer records.
(h) LENDERS' FAILURE TO PERFORM. All Advances
(other than Swing Loans and Agent Advances) shall be made by the Lenders
contemporaneously and in accordance with their Pro Rata Shares. It is understood
that (i) no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make any Advance (or other extension of credit)
hereunder, nor shall any Commitment of any Lender be increased or decreased as a
result of any failure by any other Lender to perform its obligations hereunder,
and (ii) no failure by any Lender to perform its obligations hereunder shall
excuse any other Lender from its obligations hereunder.
(i) OPTIONAL OVERADVANCES. Any contrary
provision of this Agreement notwithstanding, the Lenders hereby authorize Agent
or Swing Lender, as applicable, and Agent or Swing Lender, as applicable, may,
but is not obligated to, knowingly and intentionally, continue to make Advances
(including Swing Loans) to Borrowers notwithstanding that an Overadvance exists
or thereby would be created, so long as (i) after giving effect to such Advances
(including Swing Loans), the outstanding Revolver Usage does not exceed the
Borrowing Base by more than $4,500,000, (ii) after giving effect to such
Advances (including Swing Loans), the outstanding Revolver Usage (except for and
excluding amounts charged to the Loan Account for interest, fees, or Lender
Group Expenses) does not exceed the Maximum Revolver Amount, and (iii) at the
time of the making of any such Advance (including any Swing Loan), Agent does
not believe, in good faith, that the Overadvance created by such Advance will be
outstanding for more than 90 days. The foregoing provisions are for the
exclusive benefit of Agent, Swing Lender, and the Lenders and are not intended
to benefit Borrowers in any way. The Advances and Swing Loans, as applicable,
that are made pursuant to this Section 2.3(i) shall be subject to the same terms
and conditions as any other Advance or Swing Loan, as applicable, except that
they shall not be eligible for the LIBOR Option and the rate of interest
applicable thereto shall be the rate applicable to Advances that are Base Rate
Loans under Section 2.6(c) hereof without regard to the presence or absence of a
Default or Event of Default.
(A) In the event Agent obtains actual
knowledge that the Revolver Usage exceeds the amounts
permitted by the preceding paragraph, regardless of the amount
of, or reason for, such excess, Agent shall notify the Lenders
as soon as practicable (and prior to making any (or any
additional) intentional Overadvances (except for and excluding
amounts charged to the Loan Account for interest, fees, or
Lender Group Expenses) unless Agent determines that prior
notice would result in imminent harm to the Collateral or its
value), and the Lenders with Revolver Commitments thereupon
shall, together with Agent, jointly determine the terms of
arrangements that shall be implemented with Borrowers intended
to reduce, within a reasonable time, the outstanding principal
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amount of the Advances to Borrowers to an amount permitted by
the preceding paragraph. In the event Agent or any Lender
disagrees over the terms of reduction or repayment of any
Overadvance, the terms of reduction or repayment thereof shall
be implemented according to the determination of the Required
Lenders.
(B) Each Lender with a Revolver
Commitment shall be obligated to settle with Agent as provided
in Section 2.3(f) for the amount of such Lender's Pro Rata
Share of any unintentional Overadvances by Agent reported to
such Lender, any intentional Overadvances made as permitted
under this Section 2.3(i), and any Overadvances resulting from
the charging to the Loan Account of interest, fees, or Lender
Group Expenses.
2.4. PAYMENTS.
(a) PAYMENTS BY BORROWERS.
(i) Except as otherwise expressly provided
herein, all payments by Borrowers shall be made to Agent's Account for
the account of the Lender Group and shall be made in immediately
available funds, no later than 11:00 a.m. (California time) on the date
specified herein. Any payment received by Agent later than 11:00 a.m.
(California time), shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall
continue to accrue until such following Business Day.
(ii) Unless Agent receives notice from
Administrative Borrower prior to the date on which any payment is due
to the Lenders that Borrowers will not make such payment in full as and
when required, Agent may assume that Borrowers have made (or will make)
such payment in full to Agent on such date in immediately available
funds and Agent may (but shall not be so required), in reliance upon
such assumption, distribute to each Lender on such due date an amount
equal to the amount then due such Lender. If and to the extent
Borrowers do not make such payment in full to Agent on the date when
due, each Lender severally shall repay to Agent on demand such amount
distributed to such Lender, together with interest thereon at the
Defaulting Lender Rate for each day from the date such amount is
distributed to such Lender until the date repaid.
(b) APPORTIONMENT AND APPLICATION.
(i) Except as otherwise provided with respect to
Defaulting Lenders and except as otherwise provided in the Loan
Documents (including letter agreements between Agent and individual
Lenders), aggregate principal and interest payments shall be
apportioned ratably among the Lenders (according to the unpaid
principal balance of the Obligations to which such payments relate held
by each Lender) and payments of fees and expenses (other than fees or
expenses that are for Agent's separate account, after giving effect to
any letter agreements between Agent and individual Lenders) shall be
apportioned ratably among the Lenders having a Pro Rata Share of the
type of Commitment or Obligation to which a particular fee relates.
Except as otherwise
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specifically provided in Section 2.4(c), all payments shall be remitted
to Agent and all such payments, and all proceeds of Collateral received
by Agent, shall be applied as follows:
(A) first, to pay any Lender Group
Expenses then due to Agent under the Loan Documents, until
paid in full,
(B) second, to pay any Lender Group
Expenses then due to the Lenders under the Loan Documents, on
a ratable basis, until paid in full,
(C) third, to pay any fees then due to
Agent (for its separate accounts, after giving effect to any
letter agreements between Agent and the individual Lenders)
under the Loan Documents until paid in full,
(D) fourth, to pay any fees then due to
any or all of the Lenders (after giving effect to any letter
agreements between Agent and individual Lenders) under the
Loan Documents, on a ratable basis, until paid in full,
(E) fifth, to pay interest due in
respect of all Agent Advances, until paid in full,
(F) sixth, ratably to pay interest due
in respect of the Advances (other than Agent Advances), the
Swing Loans, and the Term Loan until paid in full,
(G) seventh, to pay the principal of
all Agent Advances until paid in full,
(H) eighth, ratably to pay all
principal amounts then due and payable (other than as a result
of an acceleration thereof) with respect to the Term Loan
until paid in full,
(I) ninth, to pay the principal of all
Swing Loans until paid in full,
(J) tenth, so long as no Event of
Default has occurred and is continuing, and at Agent's
election (which election Agent agrees will not be made if an
Overadvance would be created thereby), to pay amounts then due
and owing by Administrative Borrower or its Subsidiaries in
respect of Bank Products, until paid in full,
(K) eleventh, so long as no Event of
Default has occurred and is continuing, to pay the principal
of all Advances until paid in full,
(L) twelfth, if an Event of Default has
occurred and is continuing, ratably (i) to pay the principal
of all Advances until paid in full, (ii) to
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Agent, to be held by Agent, for the ratable benefit of Issuing
Lender and those Lenders having a Revolver Commitment, as cash
collateral in an amount up to 105% of the then extant Letter
of Credit Usage until paid in full, and (iii) to Agent, to be
held by Agent, for the benefit of the Bank Product Providers,
as cash collateral in an amount up to the amount of the Bank
Product Reserve established prior to the occurrence of, and
not in contemplation of, the subject Event of Default until
Administrative Borrower's and its Subsidiaries' obligations in
respect of the then extant Bank Products have been paid in
full or the cash collateral amount has been exhausted,
(M) thirteenth, if an Event of Default
has occurred and is continuing, to pay the outstanding
principal balance of the Term Loan (in the inverse order of
the maturity of the installments due thereunder) until the
Term Loan is paid in full,
(N) fourteenth, if an Event of Default
has occurred and is continuing, to pay any other Obligations
(including the provision of amounts to Agent, to be held by
Agent, for the benefit of the Bank Product Providers, as cash
collateral in an amount up to the amount determined by Agent
in its Permitted Discretion as the amount necessary to secure
Administrative Borrower's and its Subsidiaries' obligations in
respect of the then extant Bank Products), and
(O) fifteenth, to Borrowers (to be
wired to the Designated Account) or such other Person entitled
thereto under applicable law.
(ii) Agent promptly shall distribute to each
Lender, pursuant to the applicable wire instructions received from each
Lender in writing, such funds as it may be entitled to receive, subject
to a Settlement delay as provided in Section 2.3(f).
(iii) In each instance, so long as no Event of
Default has occurred and is continuing, this Section 2.4(b) shall not
be deemed to apply to any payment by Borrowers specified by Borrowers
to be for the payment of specific Obligations then due and payable (or
prepayable) under any provision of this Agreement.
(iv) For purposes of the foregoing, "paid in
full" means payment of all amounts owing under the Loan Documents
according to the terms thereof, including loan fees, service fees,
professional fees, interest (and specifically including interest
accrued after the commencement of any Insolvency Proceeding), default
interest, interest on interest, and expense reimbursements, whether or
not any of the foregoing would be or is allowed or disallowed in whole
or in part in any Insolvency Proceeding.
(v) In the event of a direct conflict between
the priority provisions of this Section 2.4 and other provisions
contained in any other Loan Document, it is the intention of the
parties hereto that such priority provisions in such documents shall be
read together and construed, to the fullest extent possible, to be in
concert with each other. In the event of any actual, irreconcilable
conflict that cannot be resolved as aforesaid, the terms and provisions
of this Section 2.4 shall control and govern.
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(c) MANDATORY PREPAYMENTS.
(i) If on any day the sum of the Revolver Usage
and the Letter of Credit Usage exceeds the Borrowing Base, Borrowers
shall immediately pay to Agent an amount equal to such excess to be
applied to the outstanding principal of the Advances and thereafter to
be held as cash collateral for any issued and outstanding Letters of
Credit.
(ii) If on any day the Revolver Commitment is
terminated or reduced to zero in accordance with this Agreement,
Borrowers shall immediately repay in full the Term Loan.
(iii) If at any time the outstanding principal
amount of the Term Loan exceeds the Term Loan Amount, Borrowers shall
immediately pay to Agent an amount equal to such excess, to be applied
to the principal installments of the Term Loan in the inverse order of
maturity. Agent shall have the right to have the Eligible Real Property
Collateral and the Eligible Equipment reappraised by a qualified
appraisal company selected by Agent in its Permitted Discretion from
time to time after the Closing Date for the purposes of the definition
of "Term Loan Amount" and this Section 2.4(c)(iii); provided, that
Borrowers shall only be obligated to pay for fees, charges and expenses
incurred in connection with such appraisals of the Eligible Real
Property Collateral and Eligible Equipment to the extent provided in
Section 2.11(c).
(iv) If at any time the aggregate amount of the
WFF Debt exceeds WFF Availability, the Borrowers shall immediately pay
to Agent an amount equal to such excess to be applied, first, to the
outstanding principal of the Advances, second, to the principal
installments of the Term Loan in the inverse order of maturity, and
thereafter to be held as cash collateral for any issued and outstanding
Letters of Credit. Agent shall have the right to have the Enterprise
Value of the Loan Parties reevaluated by a qualified valuation company
selected by Agent in its Permitted Discretion from time to time after
the Closing Date for the purposes of the definition of "WFF
Availability" and this Section 2.4(c)(iv); provided, that Borrowers
shall only be obligated to pay for fees, charges and expenses incurred
in connection with such valuation to the extent provided in Section
2.11(c).
(v) Immediately upon any sale or disposition by
any Loan Party or its Subsidiaries of property or assets (other than
(x) a Permitted Disposition described in clause (b), (c), (d) or (e) of
the definition of such term or (y) the DEYCO Sale) or the receipt by
any Loan Party of the proceeds of any insurance policy with respect to
Inventory or condemnation awards with respect to Inventory, Borrowers
shall prepay the outstanding principal amount of the Term Loan and the
Advances in accordance with Section 2.4(d) (and the Borrowers may
prepay the Term Loan B to the extent permitted under Sections 2.4(d)
and 7.7(a)) in an amount equal to 100% of the Net Cash Proceeds or the
insurance or condemnation proceeds received by such Person in
connection with such sales or dispositions or such casualty or
condemnation event to the extent that the aggregate amount of Net Cash
Proceeds received by all Loan Parties and their Subsidiaries (and not
paid to Agent as a prepayment of the Term Loan and the Advances)
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for all such sales or dispositions shall exceed $250,000 since the
Closing Date. Nothing contained in this subclause (v) shall permit any
Loan Party or any of its Subsidiaries to sell or otherwise dispose of
any property or assets other than in accordance with Section 7.4.
(vi) Immediately upon the consummation of the
DEYCO Sale, Borrowers shall prepay the outstanding principal amount of
the Term Loan and the Advances in accordance with Section 2.4(d) in an
amount equal to 100% of the Net Cash Proceeds received by any Loan
Party or any of its Subsidiaries in connection with such sale. Nothing
contained in this subclause (vi) shall permit any Loan Party or any of
its Subsidiaries to consummate the DEYCO Sale other than in accordance
with Section 7.4.
(vii) Upon the receipt by any Loan Party or any of
its Subsidiaries of any Extraordinary Receipts, Borrowers shall prepay
the outstanding principal amount of the Term Loan and the Advances in
accordance with Section 2.4(d) (and the Borrowers may prepay the Term
Loan B to the extent permitted under Sections 2.4(d) and 7.7(a)) in an
amount equal to 100% of such Extraordinary Receipts, net of any
reasonable expenses incurred in collecting such Extraordinary Receipts.
(viii) Upon the receipt by any Loan Party or any of
its Subsidiaries of any proceeds of the Specified Tax Refund, Borrowers
shall prepay the outstanding principal of the Term Loan and the
Advances in accordance with Section 2.4(d) below in an amount equal to
100% of such tax refund, net of any reasonable expenses incurred in
collecting such tax refund.
(ix) Within ten (10) Business Days of delivery to
the Agent of each of the audited annual financial statements pursuant
to Section 6.3(b) for an Fiscal Year of the Parent or, if such
financial statements are not delivered to the Agent on the date such
statements are required to be delivered pursuant to Section 6.3(b), ten
(10) Business Days after the date such statements are required to be
delivered to Agent pursuant to Section 6.3(b), Borrowers shall pay to
Agent an amount equal to the product of (x) the Applicable Excess Cash
Flow Percentage for such Fiscal Year, times (y) the Excess Cash Flow
for the Fiscal Year covered by such financial statements, to be applied
to the Term Loan in accordance with Section 2.4(d) (and to the extent
permitted under Sections 2.4(d) and 7.7(a), at the request of the
Borrowers, to the Term Loan B).
(x) Upon the sale or issuance by any Loan Party
or any of its Subsidiaries of any shares of its Stock, the Borrowers
shall prepay the outstanding principal amount of the Term Loan and the
Advances in accordance with Section 2.4(d) (and the Borrowers may
prepay the Term Loan B to the extent permitted under Sections 2.4(d)
and 7.7(a)) in an amount equal to 100% of the Net Cash Proceeds
received by such Person in connection therewith. The provisions of this
subsection (x) shall not be deemed to be implied consent to any such
issuance, incurrence or sale otherwise prohibited by the terms and
conditions of this Agreement.
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(d) APPLICATION OF PAYMENTS.
(i) Each prepayment pursuant to subsections
(c)(v), (c)(vii) and (c)(x) above shall be applied, first, to the Term
Loan, and second, to the extent not permitted to be paid to the Term
Loan B under Section 7.7(a), or not paid to the Term Loan B, to the
Advances and thereafter, shall be held as cash collateral for any
issued and outstanding Letters of Credit.
(ii) Each prepayment pursuant to subsection
(c)(vi) above in connection with the DEYCO Sale shall be applied as
follows: (A) an amount equal to the book value of all Accounts included
in such sale or, if greater, the amount of Advances and Letters of
Credit supported by such assets determined using the effective advance
rate under the Borrowing Base against such Accounts (determined at the
time of such sale) shall be applied to the Advances until paid in full,
(B) remaining Net Cash Proceeds of up to $1,000,000 shall be applied
first, to the Term Loan until paid in full, and second, to the
Advances, and (C) all remaining Net Cash Proceeds shall be applied to
the Advances and thereafter, shall be held as cash collateral for any
issued and outstanding Letters of Credit.
(iii) Each prepayment pursuant to subsection
(c)(viii) above in connection with the Specified Tax Refund shall be
applied as follows: (A) an amount equal to $750,000 of such proceeds
shall be applied to the Term Loan until paid in full, and (B) all
remaining proceeds of the Specified Tax Refund shall be applied to the
Advances.
(iv) Each prepayment pursuant to Section (c)(ix)
above shall be applied to the Term Loan until paid in full.
(v) Each such prepayment of the Term Loan shall
be applied against the remaining installments of principal of the Term
Loan in the inverse order of maturity.
2.5. OVERADVANCES. If, at any time or for any reason, the
amount of Obligations (other than Bank Product Obligations) owed by Borrowers to
the Lender Group pursuant to Section 2.1 or Section 2.12 is greater than either
the Dollar or percentage limitations set forth in Section 2.1 or Section 2.12,
as applicable (an "Overadvance"), Borrowers immediately shall pay to Agent, in
cash, the amount of such excess, which amount shall be used by Agent to reduce
the Obligations in accordance with the priorities set forth in Section 2.4(b).
In addition, Borrowers hereby promise to pay the Obligations (including
principal, interest, fees, costs, and expenses) in Dollars in full as and when
due and payable under the terms of this Agreement and the other Loan Documents.
2.6. INTEREST RATES AND LETTER OF CREDIT FEE: RATES,
PAYMENTS, AND CALCULATIONS.
(a) INTEREST RATES. Except as provided in clause
(c) below, all Obligations (except for undrawn Letters of Credit and except for
Bank Product Obligations) that have been charged to the Loan Account pursuant to
the terms hereof shall bear interest on the Daily Balance thereof as follows (i)
if the relevant Obligation is an Advance that is a LIBOR
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Rate Loan, at a per annum rate equal to the LIBOR Rate plus the applicable LIBOR
Rate Margin, (ii) if the relevant Obligation is a portion of the Term Loan, at a
per annum rate equal to the Base Rate plus the Base Rate Term Loan Margin, and
(iii) otherwise, at a per annum rate equal to the Base Rate plus the applicable
Base Rate Margin.
(b) LETTER OF CREDIT FEE. Borrowers shall pay
Agent (for the ratable benefit of the Lenders with a Revolver Commitment,
subject to any letter agreement between Agent and individual Lenders), a Letter
of Credit fee (in addition to the charges, commissions, fees, and costs set
forth in Section 2.12(e)) which shall accrue at a rate per annum equal to the
applicable LIBOR Rate Margin times the Daily Balance of the undrawn amount of
all outstanding Letters of Credit.
(c) DEFAULT RATE. Upon the occurrence and during
the continuation of an Event of Default (and at the election of Agent or the
Required Lenders),
(i) all Obligations (except for undrawn Letters
of Credit and except for Bank Product Obligations) that have been
charged to the Loan Account pursuant to the terms hereof shall bear
interest on the Daily Balance thereof at a per annum rate equal to 4
percentage points above the per annum rate otherwise applicable
hereunder, and
(ii) the Letter of Credit fee provided for above
shall be increased to 4 percentage points above the per annum rate
otherwise applicable hereunder.
(d) PAYMENT. Except as provided to the contrary
in Section 2.12(a), interest, Letter of Credit fees, and all other fees payable
hereunder shall be due and payable, in arrears, on the first day of each month
at any time that Obligations or Commitments are outstanding. Borrowers hereby
authorize Agent, from time to time, without prior notice to Borrowers, to charge
such interest and fees, all Lender Group Expenses (as and when incurred), the
charges, commissions, fees, and costs provided for in Section 2.12(e) (as and
when accrued or incurred), the fees and costs provided for in Section 2.11 (as
and when accrued or incurred), and all other payments as and when due and
payable under any Loan Document (including the amounts due and payable with
respect to the Term Loan and including any amounts due and payable to the Bank
Product Providers in respect of Bank Products up to the amount of the then
extant Bank Product Reserve) to Borrowers' Loan Account, which amounts
thereafter shall constitute Advances hereunder and shall accrue interest at the
rate then applicable to Advances hereunder. Any interest not paid when due shall
be compounded by being charged to Borrowers' Loan Account and shall thereafter
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances that are Base Rate Loans hereunder.
(e) COMPUTATION. All interest and fees
chargeable under the Loan Documents shall be computed on the basis of a 360 day
year for the actual number of days elapsed. In the event the Base Rate is
changed from time to time hereafter, the rates of interest hereunder based upon
the Base Rate automatically and immediately shall be increased or decreased by
an amount equal to such change in the Base Rate.
(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL
RATE. In no event shall the interest rate or rates payable under this Agreement,
plus any other amounts paid in
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connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Borrowers and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, Borrowers are and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrowers
in excess of such legal maximum, whenever received, shall be applied to reduce
the principal balance of the Obligations to the extent of such excess.
2.7. CASH MANAGEMENT.
(a) Borrowers shall and shall cause each of
their Subsidiaries to (i) establish and maintain cash management services of a
type and on terms satisfactory to Agent at one or more of the banks set forth on
Schedule 2.7(a) (each a "Cash Management Bank"), and shall request in writing
and otherwise take such reasonable steps to ensure that all of their and their
Subsidiaries' Account Debtors forward payment of the amounts owed by them
directly to such Cash Management Bank, or to Borrowers for deposit in accordance
with Section 2.7(a)(ii), and (ii) deposit or cause to be deposited promptly, and
in any event no later than the first Business Day after the date of receipt
thereof, all of their Collections (including those sent directly by their
Account Debtors to a Cash Management Bank) into a bank account in Collateral
Agent's name (a "Cash Management Account") at one of the Cash Management Banks.
(b) Each Cash Management Bank shall establish
and maintain Cash Management Agreements with Agent and Borrowers, in form and
substance acceptable to Agent. Each such Cash Management Agreement shall
provide, among other things, that (i) all items of payment deposited in such
Cash Management Account and proceeds thereof are held by such Cash Management
Bank as agent or bailee-in-possession for Collateral Agent, (ii) the Cash
Management Bank has no rights of setoff or recoupment or any other claim against
the applicable Cash Management Account, other than for payment of its service
fees and other charges directly related to the administration of such Cash
Management Account and for returned checks or other items of payment, and (iii)
except as provided in Section 2.7(f) below, it immediately will forward by daily
sweep all amounts in the applicable Cash Management Account to the Agent's
Account.
(c) So long as no Default or Event of Default
has occurred and is continuing, Administrative Borrower may amend Schedule
2.7(a) or (b) to add or replace a Cash Management Account Bank or Cash
Management Account; provided, however, that (i) such prospective Cash Management
Bank shall be satisfactory to Agent and Agent shall have consented in writing in
advance to the opening of such Cash Management Account with the prospective Cash
Management Bank, and (ii) prior to the time of the opening of such Cash
Management Account, a Borrower or a Subsidiary of a Borrower, as applicable, and
such prospective Cash Management Bank shall have executed and delivered to Agent
a Cash Management Agreement. A Borrowers or a Subsidiary of a Borrower, as
applicable shall close any of their Cash Management Accounts (and establish
replacement cash management accounts in accordance with the foregoing sentence)
promptly and in any event within 30 days of notice from Agent that the
creditworthiness of any Cash Management Bank is no longer acceptable in
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Agent's reasonable judgment, or as promptly as practicable and in any event
within 60 days of notice from Agent that the operating performance, funds
transfer, or availability procedures or performance of the Cash Management Bank
with respect to Cash Management Accounts or Agent's liability under any Cash
Management Agreement with such Cash Management Bank is no longer acceptable in
Agent's reasonable judgment.
(d) The Cash Management Accounts shall be cash
collateral accounts, with all cash, checks and similar items of payment in such
accounts securing payment of the Obligations, and in which Borrowers hereby
xxxxx x Xxxx to Collateral Agent.
(e) Each of Canadian Guarantors shall (i)
establish and maintain one or more depository accounts, under the dominion and
control of Collateral Agent pursuant to a Control Agreement among Collateral
Agent, such Canadian Guarantor, and the applicable Canadian financial
institution, in form and substance satisfactory to Agent, in respect of its
Collections and (ii) instruct all of its Account Debtors to remit all such
Collections to such depository accounts. Each of the Canadian Guarantors shall
at all times deposit all Collections into such accounts that are received by it
from any source promptly, and in any event no later than the first Business Day,
after the date of receipt thereof.
(f) So long as no Event of Default shall have
occurred and be continuing, each Canadian Guarantor may use the funds on deposit
in its foreign bank accounts for its working capital purposes. During the
continuance of an Event of Default, Collateral Agent shall have the right to
convert all non-Dollar denominated balances in each Canadian Guarantor's foreign
bank accounts into Dollars (at Borrowers' sole expense) and cause all amounts in
such accounts to be wired into a DDA or other account subject to a Control
Agreement and then wired from such DDA to a Cash Management Account. The
arrangements contemplated in Section 2.7(e) and this Section 2.7(f) shall not be
modified by any Loan Party without the prior written consent of Agent.
2.8. CREDITING PAYMENTS; FLOAT CHARGE. The receipt of any
payment item by Agent (whether from transfers to Agent by the Cash Management
Banks pursuant to the Cash Management Agreements or otherwise) shall not be
considered a payment on account unless such payment item is a wire transfer of
immediately available federal funds made to the Agent's Account or unless and
until such payment item is honored when presented for payment. Should any
payment item not be honored when presented for payment, then Borrowers shall be
deemed not to have made such payment and interest shall be calculated
accordingly. Anything to the contrary contained herein notwithstanding, any
payment item shall be deemed received by Agent only if it is received into the
Agent's Account on a Business Day on or before 11:00 a.m. (California time). If
any payment item is received into the Agent's Account on a non-Business Day or
after 11:00 a.m. (California time) on a Business Day, it shall be deemed to have
been received by Agent as of the opening of business on the immediately
following Business Day. From and after the Closing Date, Agent shall be entitled
to charge Borrowers for one (1) Business Day of 'clearance' or 'float' at the
rate then applicable under Section 2.6 to Advances that are Base Rate Loans on
all Collections that are received by Borrowers and their Subsidiaries
(regardless of whether forwarded by the Cash Management Banks to Agent). This
across-the-board one (1) Business Day clearance or float charge on all
Collections of Borrowers and their Subsidiaries is acknowledged by the parties
to constitute an integral aspect of the pricing of the
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financing of Borrowers and shall apply irrespective of whether or not there are
any outstanding monetary Obligations; the effect of such clearance or float
charge being the equivalent of charging interest on such Collections through the
completion of a period ending one (1) Business Day after the receipt thereof.
The parties acknowledge and agree that the economic benefit of the foregoing
provisions of this Section 2.8 shall be for the exclusive benefit of Agent.
2.9. DESIGNATED ACCOUNT. Agent is authorized to make the
Advances and the Term Loan, and Issuing Lender is authorized to issue the
Letters of Credit, under this Agreement based upon telephonic or other
instructions received from anyone purporting to be an Authorized Person, or
without instructions if pursuant to Section 2.6(d). Administrative Borrower
agrees to establish and maintain the Designated Account with the Designated
Account Bank for the purpose of receiving the proceeds of the Advances requested
by Borrowers and made by Agent or the Lenders hereunder. Unless otherwise agreed
by Agent and Administrative Borrower, any Advance, Agent Advance, or Swing Loan
requested by Borrowers and made by Agent or the Lenders hereunder shall be made
to the Designated Account.
2.10. MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF
OBLIGATIONS. Agent shall maintain an account on its books in the name of
Borrowers (the "Loan Account") on which Borrowers will be charged with the Term
Loan, all Advances (including Agent Advances and Swing Loans) made by Agent,
Swing Lender, or the Lenders to Borrowers or for Borrowers' account, the Letters
of Credit issued by Issuing Lender for Borrowers' account, and with all other
payment Obligations hereunder or under the other Loan Documents (except for Bank
Product Obligations), including, accrued interest, fees and expenses, and Lender
Group Expenses. In accordance with Section 2.8, the Loan Account will be
credited with all payments received by Agent from Borrowers or for Borrowers'
account, including all amounts received in the Agent's Account from any Cash
Management Bank. Agent shall render statements regarding the Loan Account to
Administrative Borrower, including principal, interest, fees, and including an
itemization of all charges and expenses constituting Lender Group Expenses
owing, and such statements, absent manifest error, shall be conclusively
presumed to be correct and accurate and constitute an account stated between
Borrowers and the Lender Group unless, within 30 days after receipt thereof by
Administrative Borrower, Administrative Borrower shall deliver to Agent written
objection thereto describing the error or errors contained in any such
statements.
2.11. FEES. Borrowers shall pay to Agent the following fees
and charges, which fees and charges shall be non-refundable when paid
(irrespective of whether this Agreement is terminated thereafter) and shall be
apportioned among the Lenders in accordance with the terms of letter agreements
between Agent and individual Lenders:
(a) UNUSED LINE FEE. On the first day of each
month during the term of this Agreement, an unused line fee in the amount equal
to 0.25% per annum times the result of (i) the Maximum Revolver Amount, less
(ii) the sum of (A) the average Daily Balance of Advances that were outstanding
during the immediately preceding month, plus (B) the average Daily Balance of
the Letter of Credit Usage during the immediately preceding month,
(b) FEE LETTER FEES. As and when due and payable
under the terms of the Fee Letter, the fees set forth in the Fee Letter, and
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(c) AUDIT, APPRAISAL, AND VALUATION CHARGES.
Audit, appraisal, and valuation fees and charges as follows (i) a fee of $850
per day, per auditor, plus out-of-pocket expenses for each financial audit of
Borrower performed by personnel employed by Agent, (ii) a fee of $850 per day,
per applicable individual, plus out-of-pocket expenses for the establishment of
electronic collateral reporting systems, (iii) a fee of $1,500 per day per
appraiser, plus out-of-pocket expenses, for each appraisal of the Collateral, or
any portion thereof, performed by personnel employed by Agent, and (iv) the
actual charges paid or incurred by Agent if it elects to employ the services of
one or more third Persons to perform financial audits of Borrowers or their
Subsidiaries, to establish electronic collateral reporting systems, to appraise
the Collateral, or any portion thereof, or to assess Borrowers' and their
Subsidiaries' business valuation, provided that, in the absence of a continuing
Event of Default, the Borrowers shall not be required to pay for more than (i)
four financial audits of the Loan Parties in any Fiscal Year of the Parent, (ii)
one appraisal of the Real Property Collateral in any Fiscal Year of the Parent,
(iii) one appraisal of the Eligible Equipment in any Fiscal Year of the Parent,
and (iv) one determination of the Loan Parties' Enterprise Value in any Fiscal
Year of the Parent.
2.12. LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this
Agreement, the Issuing Lender agrees to issue letters of credit for the account
of Borrowers (each, an "L/C") or to purchase participations or execute
indemnities or reimbursement obligations (each such undertaking, an "L/C
Undertaking") with respect to letters of credit issued by an Underlying Issuer
(as of the Closing Date, the prospective Underlying Issuer is to be Xxxxx Fargo)
for the account of Borrowers. To request the issuance of an L/C or an L/C
Undertaking (or the amendment, renewal, or extension of an outstanding L/C or
L/C Undertaking), Administrative Borrower shall hand deliver or telecopy (or
transmit by electronic communication, if arrangements for doing so have been
approved by the Issuing Lender) to the Issuing Lender and Agent (reasonably in
advance of the requested date of issuance, amendment, renewal, or extension) a
notice requesting the issuance of an L/C or L/C Undertaking, or identifying the
L/C or L/C Undertaking to be amended, renewed, or extended, the date of
issuance, amendment, renewal, or extension, the date on which such L/C or L/C
Undertaking is to expire, the amount of such L/C or L/C Undertaking, the name
and address of the beneficiary thereof (or of the Underlying Letter of Credit,
as applicable), and such other information as shall be necessary to prepare,
amend, renew, or extend such L/C or L/C Undertaking. If requested by the Issuing
Lender, Borrowers also shall be an applicant under the application with respect
to any Underlying Letter of Credit that is to be the subject of an L/C
Undertaking. The Issuing Lender shall have no obligation to issue a Letter of
Credit if any of the following would result after giving effect to the requested
Letter of Credit:
(i) the Letter of Credit Usage would exceed the
Borrowing Base less the then extant amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed
$10,000,000, or
(iii) the Letter of Credit Usage would exceed the
Maximum Revolver Amount less the then extant amount of outstanding
Advances.
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Borrowers and the Lender Group acknowledge and agree that certain Underlying
Letters of Credit may be issued to support letters of credit that already are
outstanding as of the Closing Date. Each Letter of Credit (and corresponding
Underlying Letter of Credit) shall be in form and substance acceptable to the
Issuing Lender (in the exercise of its Permitted Discretion), including the
requirement that the amounts payable thereunder must be payable in Dollars. If
Issuing Lender is obligated to advance funds under a Letter of Credit, Borrowers
immediately shall reimburse such L/C Disbursement to Issuing Lender by paying to
Agent an amount equal to such L/C Disbursement not later than 11:00 a.m.,
California time, on the date that such L/C Disbursement is made, if
Administrative Borrower shall have received written or telephonic notice of such
L/C Disbursement prior to 10:00 a.m., California time, on such date, or, if such
notice has not been received by Administrative Borrower prior to such time on
such date, then not later than 11:00 a.m., California time, on (i) the Business
Day that Administrative Borrower receives such notice, if such notice is
received prior to 10:00 a.m., California time, on the date of receipt, and, in
the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances that are Base Rate Loans
under Section 2.6. To the extent an L/C Disbursement is deemed to be an Advance
hereunder, Borrowers' obligation to reimburse such L/C Disbursement shall be
discharged and replaced by the resulting Advance. Promptly following receipt by
Agent of any payment from Borrowers pursuant to this paragraph, Agent shall
distribute such payment to the Issuing Lender or, to the extent that Lenders
have made payments pursuant to Section 2.12(c) to reimburse the Issuing Lender,
then to such Lenders and the Issuing Lender as their interest may appear.
(b) Promptly following receipt of a notice of
L/C Disbursement pursuant to Section 2.12(a), each Lender with a Revolver
Commitment agrees to fund its Pro Rata Share of any Advance deemed made pursuant
to the foregoing subsection on the same terms and conditions as if Borrowers had
requested such Advance and Agent shall promptly pay to Issuing Lender the
amounts so received by it from the Lenders. By the issuance of a Letter of
Credit (or an amendment to a Letter of Credit increasing the amount thereof) and
without any further action on the part of the Issuing Lender or the Lenders with
Revolver Commitment, the Issuing Lender shall be deemed to have granted to each
Lender with a Revolver Commitment, and each Lender with a Revolver Commitment
shall be deemed to have purchased, a participation in each Letter of Credit, in
an amount equal to its Pro Rata Share of the Risk Participation Liability of
such Letter of Credit, and each such Lender agrees to pay to Agent, for the
account of the Issuing Lender, such Lender's Pro Rata Share of any payments made
by the Issuing Lender under such Letter of Credit. In consideration and in
furtherance of the foregoing, each Lender with a Revolver Commitment hereby
absolutely and unconditionally agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of each L/C Disbursement made by
the Issuing Lender and not reimbursed by Borrowers on the date due as provided
in clause (a) of this Section, or of any reimbursement payment required to be
refunded to Borrowers for any reason. Each Lender with a Revolver Commitment
acknowledges and agrees that its obligation to deliver to Agent, for the account
of the Issuing Lender, an amount equal to its respective Pro Rata Share of each
L/C Disbursement made by the Issuing Lender pursuant to this Section 2.12(b)
shall be absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuation of an Event of Default or Default
or the failure to satisfy any condition set forth in Section 3 hereof. If any
such Lender fails to make available to Agent the amount of such Lender's Pro
Rata Share of each L/C Disbursement made
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by the Issuing Lender in respect of such Letter of Credit as provided in this
Section, such Lender shall be deemed to be a Defaulting Lender and Agent (for
the account of the Issuing Lender) shall be entitled to recover such amount on
demand from such Lender together with interest thereon at the Defaulting Lender
Rate until paid in full.
(c) Each Borrower hereby agrees to indemnify,
save, defend, and hold the Lender Group harmless from any loss, cost, expense,
or liability, and reasonable attorneys fees incurred by the Lender Group arising
out of or in connection with any Letter of Credit; provided, however, that no
Borrower shall be obligated hereunder to indemnify for any loss, cost, expense,
or liability to the extent that it is caused by the gross negligence or willful
misconduct of the Issuing Lender or any other member of the Lender Group. Each
Borrower agrees to be bound by the Underlying Issuer's regulations and
interpretations of any Underlying Letter of Credit or by Issuing Lender's
interpretations of any L/C issued by Issuing Lender to or for such Borrower's
account, even though this interpretation may be different from such Borrower's
own, and each Borrower understands and agrees that the Lender Group shall not be
liable for any error, negligence, or mistake, whether of omission or commission,
in following Borrowers' instructions or those contained in the Letter of Credit
or any modifications, amendments, or supplements thereto. Each Borrower
understands that the L/C Undertakings may require Issuing Lender to indemnify
the Underlying Issuer for certain costs or liabilities arising out of claims by
Borrowers against such Underlying Issuer. Each Borrower hereby agrees to
indemnify, save, defend, and hold the Lender Group harmless with respect to any
loss, cost, expense (including reasonable attorneys fees), or liability incurred
by the Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; provided, however, that no Borrower
shall be obligated hereunder to indemnify for any loss, cost, expense, or
liability to the extent that it is caused by the gross negligence or willful
misconduct of the Issuing Lender or any other member of the Lender Group.
(d) Each Borrower hereby authorizes and directs
any Underlying Issuer to deliver to the Issuing Lender all instruments,
documents, and other writings and property received by such Underlying Issuer
pursuant to such Underlying Letter of Credit and to accept and rely upon the
Issuing Lender's instructions with respect to all matters arising in connection
with such Underlying Letter of Credit and the related application.
(e) Any and all charges, commissions, fees, and
costs incurred by the Issuing Lender relating to Underlying Letters of Credit
shall be Lender Group Expenses for purposes of this Agreement and immediately
shall be reimbursable by Borrowers to Agent for the account of the Issuing
Lender; it being acknowledged and agreed by each Borrower that, as of the
Closing Date, the usage charge imposed by the prospective Underlying Issuer is
..825% per annum times the face amount of each Underlying Letter of Credit, that
such issuance charge may be changed from time to time, and that the Underlying
Issuer also imposes a schedule of charges for amendments, extensions, drawings,
and renewals.
(f) If by reason of (i) any change after the
Closing Date in any applicable law, treaty, rule, or regulation or any change in
the interpretation or application thereof by any Governmental Authority, or (ii)
compliance by the Underlying Issuer or the Lender Group with any direction,
request, or requirement (irrespective of whether having the
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force of law) of any Governmental Authority or monetary authority including,
Regulation D of the Federal Reserve Board as from time to time in effect (and
any successor thereto):
(i) any reserve, deposit, or similar requirement
is or shall be imposed or modified in respect of any Letter of Credit
issued hereunder, or
(ii) there shall be imposed on the Underlying
Issuer or the Lender Group any other condition regarding any Underlying
Letter of Credit or any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.
2.13. LIBOR OPTION.
(a) INTEREST AND INTEREST PAYMENT DATES. In lieu
of having interest charged at the rate based upon the Base Rate, Borrowers shall
have the option (the "LIBOR Option") to have interest on all or a portion of the
Advances be charged at a rate of interest based upon the LIBOR Rate. Interest on
LIBOR Rate Loans shall be payable on the earliest of (i) the last day of the
Interest Period applicable thereto, (ii) the occurrence of an Event of Default
in consequence of which the Required Lenders or Agent on behalf thereof have
elected to accelerate the maturity of all or any portion of the Obligations, or
(iii) termination of this Agreement pursuant to the terms hereof. On the last
day of each applicable Interest Period, unless Administrative Borrower properly
has exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder. At any
time that an Event of Default has occurred and is continuing, Borrowers no
longer shall have the option to request that Advances bear interest at the LIBOR
Rate and Agent shall have the right to convert the interest rate on all
outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans
hereunder.
(b) LIBOR ELECTION.
(i) Administrative Borrower may, at any time and
from time to time, so long as no Event of Default has occurred and is
continuing, elect to exercise the LIBOR Option by notifying Agent prior
to 11:00 a.m. (California time) at least 3 Business Days prior to the
commencement of the proposed Interest Period (the "LIBOR Deadline").
Notice of Administrative Borrower's election of the LIBOR Option for a
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permitted portion of the Advances and an Interest Period pursuant to
this Section shall be made by delivery to Agent of a LIBOR Notice
received by Agent before the LIBOR Deadline, or by telephonic notice
received by Agent before the LIBOR Deadline (to be confirmed by
delivery to Agent of a LIBOR Notice received by Agent prior to 5:00
p.m. (California time) on the same day). Promptly upon its receipt of
each such LIBOR Notice, Agent shall provide a copy thereof to each of
the Lenders having a Revolver Commitment.
(ii) Each LIBOR Notice shall be irrevocable and
binding on Borrowers. In connection with each LIBOR Rate Loan, each
Borrower shall indemnify, defend, and hold Agent and the Lenders
harmless against any loss, cost, or expense incurred by Agent or any
Lender as a result of (a) the payment of any principal of any LIBOR
Rate Loan other than on the last day of an Interest Period applicable
thereto (including as a result of an Event of Default), (b) the
conversion of any LIBOR Rate Loan other than on the last day of the
Interest Period applicable thereto, or (c) the failure to borrow,
convert, continue or prepay any LIBOR Rate Loan on the date specified
in any LIBOR Notice delivered pursuant hereto (such losses, costs, and
expenses, collectively, "Funding Losses"). Funding Losses shall, with
respect to Agent or any Lender, be deemed to equal the amount
determined by Agent or such Lender to be the excess, if any, of (i) the
amount of interest that would have accrued on the principal amount of
such LIBOR Rate Loan had such event not occurred, at the LIBOR Rate
that would have been applicable thereto, for the period from the date
of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue,
for the period that would have been the Interest Period therefor),
minus (ii) the amount of interest that would accrue on such principal
amount for such period at the interest rate which Agent or such Lender
would be offered were it to be offered, at the commencement of such
period, Dollar deposits of a comparable amount and period in the London
interbank market. A certificate of Agent or a Lender delivered to
Administrative Borrower setting forth any amount or amounts that Agent
or such Lender is entitled to receive pursuant to this Section 2.13
shall be conclusive absent manifest error.
(iii) Borrowers shall have not more than 7 LIBOR
Rate Loans in effect at any given time. Borrowers only may exercise the
LIBOR Option for LIBOR Rate Loans of at least $1,000,000 and integral
multiples of $500,000 in excess thereof.
(c) PREPAYMENTS. Borrowers may prepay LIBOR Rate
Loans at any time; provided, however, that in the event that LIBOR Rate Loans
are prepaid on any date that is not the last day of the Interest Period
applicable thereto, including as a result of any automatic prepayment through
the required application by Agent of proceeds of Borrowers' and their
Subsidiaries' Collections in accordance with Section 2.4(b) or for any other
reason, including early termination of the term of this Agreement or
acceleration of all or any portion of the Obligations pursuant to the terms
hereof, each Borrower shall indemnify, defend, and hold Agent and the Lenders
and their Participants harmless against any and all Funding Losses in accordance
with clause (b) above.
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(d) SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.
(i) The LIBOR Rate may be adjusted by Agent with
respect to any Lender on a prospective basis to take into account any
additional or increased costs to such Lender of maintaining or
obtaining any eurodollar deposits or increased costs due to changes in
applicable law occurring subsequent to the commencement of the then
applicable Interest Period, including changes in tax laws (except
changes of general applicability in corporate income tax laws) and
changes in the reserve requirements imposed by the Board of Governors
of the Federal Reserve System (or any successor), excluding the Reserve
Percentage, which additional or increased costs would increase the cost
of funding loans bearing interest at the LIBOR Rate. In any such event,
the affected Lender shall give Administrative Borrower and Agent notice
of such a determination and adjustment and Agent promptly shall
transmit the notice to each other Lender and, upon its receipt of the
notice from the affected Lender, Administrative Borrower may, by notice
to such affected Lender (y) require such Lender to furnish to
Administrative Borrower a statement setting forth the basis for
adjusting such LIBOR Rate and the method for determining the amount of
such adjustment, or (z) repay the LIBOR Rate Loans with respect to
which such adjustment is made (together with any amounts due under
clause (b)(ii) above).
(ii) In the event that any change in market
conditions or any law, regulation, treaty, or directive, or any change
therein or in the interpretation of application thereof, shall at any
time after the date hereof, in the reasonable opinion of any Lender,
make it unlawful or impractical for such Lender to fund or maintain
LIBOR Advances or to continue such funding or maintaining, or to
determine or charge interest rates at the LIBOR Rate, such Lender shall
give notice of such changed circumstances to Agent and Administrative
Borrower and Agent promptly shall transmit the notice to each other
Lender and (y) in the case of any LIBOR Rate Loans of such Lender that
are outstanding, the date specified in such Lender's notice shall be
deemed to be the last day of the Interest Period of such LIBOR Rate
Loans, and interest upon the LIBOR Rate Loans of such Lender thereafter
shall accrue interest at the rate then applicable to Base Rate Loans,
and (z) Borrowers shall not be entitled to elect the LIBOR Option until
such Lender determines that it would no longer be unlawful or
impractical to do so.
(e) NO REQUIREMENT OF MATCHED FUNDING. Anything
to the contrary contained herein notwithstanding, neither Agent, nor any Lender,
nor any of their Participants, is required actually to acquire eurodollar
deposits to fund or otherwise match fund any Obligation as to which interest
accrues at the LIBOR Rate. The provisions of this Section shall apply as if each
Lender or its Participants had match funded any Obligation as to which interest
is accruing at the LIBOR Rate by acquiring eurodollar deposits for each Interest
Period in the amount of the LIBOR Rate Loans.
2.14. CAPITAL REQUIREMENTS. If, after the date hereof, any
Lender determines that (i) the adoption of or change in any law, rule,
regulation or guideline regarding capital requirements for banks or bank holding
companies, or any change in the interpretation or application thereof by any
Governmental Authority charged with the administration thereof, or (ii)
compliance by such Lender or its parent bank holding company with any guideline,
request
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or directive of any such entity regarding capital adequacy (whether or not
having the force of law), has the effect of reducing the return on such Lender's
or such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Administrative Borrower and Agent thereof. Following receipt
of such notice, Borrowers agree to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined, payable
within 90 days after presentation by such Lender of a statement in the amount
and setting forth in reasonable detail such Lender's calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error). In determining such amount, such
Lender may use any reasonable averaging and attribution methods.
2.15. JOINT AND SEVERAL LIABILITY OF BORROWERS.
(a) Each Borrower is accepting joint and several
liability hereunder and under the other Loan Documents in consideration of the
financial accommodations to be provided by the Agent and the Lenders under this
Agreement, for the mutual benefit, directly and indirectly, of each Borrower and
in consideration of the undertakings of the other Borrowers to accept joint and
several liability for the Obligations.
(b) Each Borrower, jointly and severally, hereby
irrevocably and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Borrowers, with respect to
the payment and performance of all of the Obligations (including, without
limitation, any Obligations arising under this Section 2.15), it being the
intention of the parties hereto that all the Obligations shall be the joint and
several obligations of each Person composing Borrowers without preferences or
distinction among them.
(c) If and to the extent that any of Borrowers
shall fail to make any payment with respect to any of the Obligations as and
when due or to perform any of the Obligations in accordance with the terms
thereof, then in each such event the other Persons composing Borrowers will make
such payment with respect to, or perform, such Obligation.
(d) The Obligations of each Person composing
Borrowers under the provisions of this Section 2.15 constitute the absolute and
unconditional, full recourse Obligations of each Person composing Borrowers
enforceable against each such Borrower to the full extent of its properties and
assets, irrespective of the validity, regularity or enforceability of this
Agreement or any other circumstances whatsoever.
(e) Except as otherwise expressly provided in
this Agreement, each Person composing Borrowers hereby waives notice of
acceptance of its joint and several liability, notice of any Advances or Letters
of Credit issued under or pursuant to this Agreement, notice of the occurrence
of any Default, Event of Default, or of any demand for any payment under this
Agreement, notice of any action at any time taken or omitted by Agent or Lenders
under or in respect of any of the Obligations, any requirement of diligence or
to mitigate damages and,
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generally, to the extent permitted by applicable law, all demands, notices and
other formalities of every kind in connection with this Agreement (except as
otherwise provided in this Agreement). Each Person composing Borrowers hereby
assents to, and waives notice of, any extension or postponement of the time for
the payment of any of the Obligations, the acceptance of any payment of any of
the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by Agent or Lenders at any time or times
in respect of any default by any Person composing Borrowers in the performance
or satisfaction of any term, covenant, condition or provision of this Agreement,
any and all other indulgences whatsoever by Agent or Lenders in respect of any
of the Obligations, and the taking, addition, substitution or release, in whole
or in part, at any time or times, of any security for any of the Obligations or
the addition, substitution or release, in whole or in part, of any Person
composing Borrowers. Without limiting the generality of the foregoing, each
Borrower assents to any other action or delay in acting or failure to act on the
part of any Agent or Lender with respect to the failure by any Person composing
Borrowers to comply with any of its respective Obligations, including, without
limitation, any failure strictly or diligently to assert any right or to pursue
any remedy or to comply fully with applicable laws or regulations thereunder,
which might, but for the provisions of this Section 2.15 afford grounds for
terminating, discharging or relieving any Person composing Borrowers, in whole
or in part, from any of its Obligations under this Section 2.15, it being the
intention of each Person composing Borrowers that, so long as any of the
Obligations hereunder remain unsatisfied, the Obligations of such Person
composing Borrowers under this Section 2.15 shall not be discharged except by
performance and then only to the extent of such performance. The Obligations of
each Person composing Borrowers under this Section 2.15 shall not be diminished
or rendered unenforceable by any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect to any Person
composing Borrowers or any Agent or Lender. The joint and several liability of
the Persons composing Borrowers hereunder shall continue in full force and
effect notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, constitution or place of formation of any of the Persons
composing Borrowers or any Agent or Lender.
(f) Each Person composing Borrowers represents
and warrants to Agent and Lenders that such Borrower is currently informed of
the financial condition of Borrowers and of all other circumstances which a
diligent inquiry would reveal and which bear upon the risk of nonpayment of the
Obligations. Each Person composing Borrowers further represents and warrants to
Agent and Lenders that such Borrower has read and understands the terms and
conditions of the Loan Documents. Each Person composing Borrowers hereby
covenants that such Borrower will continue to keep informed of Borrowers'
financial condition, the financial condition of other guarantors, if any, and of
all other circumstances which bear upon the risk of nonpayment or nonperformance
of the Obligations.
(g) Each of the Persons composing Borrowers
waives all rights and defenses arising out of an election of remedies by the
Agent or any Lender, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for a guaranteed obligation,
has destroyed the Agent's or such Lender's rights of subrogation and
reimbursement against such Borrower by the operation of Section 580(d) of the
California Code of Civil Procedure or otherwise.
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(h) Each of the Persons composing Borrowers
waives all rights and defenses that such Borrower may have because the
Obligations are secured by Real Property. This means, among other things:
(i) Agent and Lenders may collect from such
Borrower without first foreclosing on any Real or Personal Property
Collateral pledged by Borrowers.
(ii) If Agent or any Lender forecloses on any
Real Property Collateral pledged by Borrowers:
A. The amount of the Obligations may
be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if
the collateral is worth more than the sale price.
B. Agent and Lenders may collect from
such Borrower even if Agent or Lenders, by
foreclosing on the Real Property Collateral, has
destroyed any right such Borrower may have to collect
from the other Borrowers.
This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure.
(i) The provisions of this Section 2.15 are made
for the benefit of the Agent, the Lenders and their respective successors and
assigns, and may be enforced by it or them from time to time against any or all
of the Persons composing Borrowers as often as occasion therefor may arise and
without requirement on the part of any such Agent, Lender, successor or assign
first to marshal any of its or their claims or to exercise any of its or their
rights against any of the other Persons composing Borrowers or to exhaust any
remedies available to it or them against any of the other Persons composing
Borrowers or to resort to any other source or means of obtaining payment of any
of the Obligations hereunder or to elect any other remedy. The provisions of
this Section 2.15 shall remain in effect until all of the Obligations shall have
been paid in full or otherwise fully satisfied. If at any time, any payment, or
any part thereof, made in respect of any of the Obligations, is rescinded or
must otherwise be restored or returned by any Agent or Lender upon the
insolvency, bankruptcy or reorganization of any of the Persons composing
Borrowers, or otherwise, the provisions of this Section 2.15 will forthwith be
reinstated in effect, as though such payment had not been made.
(j) Each of the Persons composing Borrowers
hereby agrees that it will not enforce any of its rights of contribution or
subrogation against the other Persons composing Borrowers with respect to any
liability incurred by it hereunder or under any of the other Loan Documents, any
payments made by it to the Agent or the Lenders with respect to any of the
Obligations or any collateral security therefor until such time as all of the
Obligations have been paid in full in cash. Any claim which any Borrower may
have against any other Borrower with respect to any payments to any Agent or
Lender hereunder or under any other Loan Documents are hereby expressly made
subordinate and junior in right of payment, without
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limitation as to any increases in the Obligations arising hereunder or
thereunder, to the prior payment in full in cash of the Obligations and, in the
event of any insolvency, bankruptcy, receivership, liquidation, reorganization
or other similar proceeding under the laws of any jurisdiction relating to any
Borrower, its debts or its assets, whether voluntary or involuntary, all such
Obligations shall be paid in full in cash before any payment or distribution of
any character, whether in cash, securities or other property, shall be made to
any other Borrower therefor.
(k) Each of the Persons composing Borrowers
hereby agrees that, after the occurrence and during the continuance of any
Default or Event of Default, the payment of any amounts due with respect to the
indebtedness owing by any Borrower to any other Borrower is hereby subordinated
to the prior payment in full in cash of the Obligations. Each Borrower hereby
agrees that after the occurrence and during the continuance of any Default or
Event of Default, such Borrower will not demand, xxx for or otherwise attempt to
collect any indebtedness of any other Borrower owing to such Borrower until the
Obligations shall have been paid in full in cash. If, notwithstanding the
foregoing sentence, such Borrower shall collect, enforce or receive any amounts
in respect of such indebtedness, such amounts shall be collected, enforced and
received by such Borrower as trustee for the Agent, and such Borrower shall
deliver any such amounts to Agent for application to the Obligations in
accordance with Section 2.4(b).
3. CONDITIONS; TERM OF AGREEMENT.
3.1. CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF
CREDIT. The obligation of the Lender Group (or any member thereof) to make the
initial Advance (or otherwise to extend any initial credit provided for
hereunder), is subject to the fulfillment, to the satisfaction of Agent, of each
of the conditions precedent set forth below:
(a) the Closing Date shall occur on or before
October 31, 2003;
(b) Agent shall have received (i) the UCC Filing
Authorization Letter, duly executed by each Loan Party, (ii) a statutory lien
search authorization form in respect of Canadian statutory liens against the
Canadian Guarantors, (iii) satisfactory evidence of the filing of all UCC and
PPSA financing statements in such office or offices as may be necessary or, in
the opinion of Agent, desirable to perfect the security interests purported to
be created by each applicable Loan Document, and (iv) the results of its UCC,
PPSA, judgment and tax lien searches, which searches shall not have revealed any
Liens on the assets or properties of the Loan Parties other than Permitted Liens
and Liens to be terminated on the Closing Date;
(c) Agent shall have received each of the
following documents, in form and substance satisfactory to Agent, duly executed,
and each such document shall be in full force and effect:
(i) the Cash Management Agreements,
(ii) the Control Agreements,
(iii) the Copyright Security Agreement,
(iv) the Disbursement Letter,
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(v) the Due Diligence Certificate,
(vi) the Fee Letter,
(vii) the Canadian Documents, together with (A)
all certificates representing the shares of Stock pledged thereunder,
as well as Stock powers with respect thereto endorsed in blank, and (B)
all promissory notes pledged thereunder, as well as allonges thereto or
other appropriate transfer certificates endorsed in blank,
(viii) the Validity and Support Guaranty,
(ix) the Intercompany Subordination Agreement,
(x) the Mortgages,
(xi) the Flow of Funds Agreement,
(xii) the Patent Security Agreement,
(xiii) each Pay-Off Letter, together with UCC and
PPSA termination statements and other documentation evidencing the
termination by Existing Lenders of their respective Liens in and to the
properties and assets of Borrowers and their Subsidiaries (or written
authorization of the Existing Lenders for the Collateral Agent to file
such UCC and PPSA termination statements),
(xiv) the Pledge Agreement, together with (i) all
certificates representing the shares of Stock pledged thereunder, as
well as Stock powers with respect thereto endorsed in blank, and (ii)
all promissory notes pledged thereunder, together with an allonge for
each promissory note (or the written agreement of the Existing Lenders
to deliver such Stock certificates and promissory notes to the
Collateral Agent within one Business Day of the Closing Date, subject
to such other terms and conditions as the Collateral Agent may
reasonably require),
(xv) the Trademark Security Agreement,
(xvi) the Security Agreement;
(xvii) the Contribution Agreement; and
(xviii) the Intercreditor and Collateral Agency
Agreement.
(d) Agent shall have received a certificate from
the Secretary of each Borrower attesting to the resolutions of such Borrower's
Board of Directors authorizing its execution, delivery, and performance of this
Agreement and the other Loan Documents to which such Borrower is a party and
authorizing specific officers of such Borrower to execute the same;
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(e) Agent shall have received copies of each
Borrower's Governing Documents, as amended, modified, or supplemented to the
Closing Date, certified by the Secretary of such Borrower;
(f) Agent shall have received a certificate of
status with respect to each Borrower, dated within 10 days of the Closing Date,
such certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Borrower, which certificate shall indicate that such
Borrower is in good standing in such jurisdiction;
(g) Agent shall have received certificates of
status with respect to each Borrower, each dated as of a date acceptable to
Agent, such certificates to be issued by the appropriate officer of the
jurisdictions (other than the jurisdiction of organization of such Borrower) in
which its failure to be duly qualified or licensed would constitute a Material
Adverse Change, which certificates shall indicate that such Borrower is in good
standing in such jurisdictions;
(h) Agent shall have received a certificate from
the Secretary of each Guarantor attesting to the resolutions of such Guarantor's
Board of Directors authorizing its execution, delivery, and performance of the
Loan Documents to which such Guarantor is a party and authorizing specific
officers of such Guarantor to execute the same;
(i) Collateral Agent shall have received copies
of each Guarantor's Governing Documents, as amended, modified, or supplemented
to the Closing Date, certified by the Secretary of such Guarantor;
(j) Collateral Agent shall have received a
certificate of status with respect to each Guarantor, dated within 10 days of
the Closing Date, such certificate to be issued by the appropriate officer of
the jurisdiction of organization of such Guarantor, which certificate shall
indicate that such Guarantor is in good standing in such jurisdiction;
(k) Agent shall have received certificates of
status with respect to each Guarantor, each dated as of a date acceptable to
Agent, such certificates to be issued by the appropriate officer of the
jurisdictions (other than the jurisdiction of organization of such Guarantor) in
which its failure to be duly qualified or licensed would constitute a Material
Adverse Change, which certificates shall indicate that such Guarantor is in good
standing in such jurisdictions;
(l) Collateral Agent shall have received a
certificate of insurance, together with the endorsements thereto, as are
required by Section 6.8, the form and substance of which shall be satisfactory
to Agent;
(m) Collateral Agent shall have received (i)
Collateral Access Agreements with respect to the Leased Real Property where the
Loan Parties' Eligible Equipment or books and records are maintained (other than
the Florida Headquarters), except to the extent Agent has established a Rent
Reserve against the Borrowing Base for such Leased Real Property location, and
(ii) a Collateral Access Agreement executed by the owner of the Loan Parties'
Florida Headquarters;
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(n) Agent shall have received opinions of
Borrowers' and Guarantors' counsel in form and substance satisfactory to Agent;
(o) Agent shall have received satisfactory
evidence (including a certificate of the chief financial officer of Parent) that
all tax returns required to be filed by Borrowers and their Subsidiaries have
been timely filed and all taxes upon Borrowers and their Subsidiaries or their
properties, assets, income, and franchises (including Real Property taxes, sales
taxes, payroll taxes and excise taxes) have been paid prior to delinquency,
except such taxes that are the subject of a Permitted Protest or otherwise
permitted to remain unpaid under Section 6.7;
(p) after giving effect to (i) the initial
extensions of credit hereunder and the payment of all fees and expenses required
to be paid by Borrowers on the Closing Date under this Agreement or the other
Loan Documents, and (ii) the extension of the Term Loan B and the payment of all
fees and expenses required to be paid by Borrowers on the Closing Date under the
Term Loan B Loan Agreement (and the other Term Loan B Loan Documents), (A) the
Borrowers shall have the Required Availability and (B) the Senior Debt Ratio
shall not exceed 3.5 to 1.0.
(q) Agent shall have completed its business,
legal, and collateral due diligence, including (i) a collateral audit and review
of Borrowers' books and records and verification of Borrowers' representations
and warranties to the Lender Group, the results of which shall be satisfactory
to Agent (such audit and review to be comprised of both a prospect audit and a
takeover audit, and to include, but not be limited to, customer verifications,
cash testing, and machinery and equipment verification), (ii) review and
satisfaction with a disaster recovery plan for IPD, and review and satisfaction
with a Phase I and Phase II Environmental Assessment Study from environmental
consultants acceptable to Agent for the Quincy, Illinois facility owned by Xxxx
Xxxxxx and the Philadelphia, Pennsylvania facility owned by Source-Xxxxxx
Industries, Inc.;
(r) Agent shall have received completed
reference checks with respect to Loan Parties' senior management, the results of
which are satisfactory to Agent in its sole discretion;
(s) Agent shall have (i) received an appraisal
of the Net Liquidation Percentage applicable to Borrowers' and their
Subsidiaries' Equipment, the results of which shall be satisfactory to Agent,
and (ii) engaged Xxxxx Xxxxxx and Company LLP to determine the Enterprise Value
of the Loan Parties in accordance with Section 3.2(d);
(t) Agent shall have received Borrowers' Closing
Date Business Plan;
(u) Borrowers shall have paid all Lender Group
Expenses incurred in connection with the transactions evidenced by this
Agreement;
(v) Agent shall have received (i) appraisals of
the Real Property Collateral set forth in Part I of Schedule R-1 satisfactory to
Agent, and (ii) mortgagee title insurance policies (or marked commitments to
issue the same) for such Real Property Collateral issued by a title insurance
company satisfactory to Agent (each a "Mortgage Policy" and,
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collectively, the "Mortgage Policies") in amounts satisfactory to Agent assuring
Agent that the Mortgages on such Real Property Collateral are valid and
enforceable first priority mortgage Liens on such Real Property Collateral free
and clear of all defects and encumbrances except Permitted Liens, and the
Mortgage Policies otherwise shall be in form and substance satisfactory to Agent
(the Real Property Collateral referred to in this Section 3.1(v) is referred to
herein as the "Eligible Real Property Collateral";
(w) Agent shall have received a phase-I
environmental report and a real estate survey with respect to each parcel
composing the Eligible Real Property Collateral; the environmental consultants
and surveyors retained for such reports or surveys, the scope of the reports or
surveys, and the results thereof shall be acceptable to Agent;
(x) Agent shall have received copies of each of
(A) the existing collective bargaining agreements, and (B) all Material
Contracts together with a certificate of the Secretary of Administrative Loan
Party certifying each such document as being a true, correct, and complete copy
thereof;
(y) Borrowers and each of their Subsidiaries
shall have received all licenses, approvals or evidence of other actions
required by any Governmental Authority in connection with the execution and
delivery by Borrowers or their Subsidiaries of the Loan Document or with the
consummation of the transactions contemplated thereby;
(z) the Agent shall have received copies of the
Term Loan B Loan Agreement and all other Term Loan B Loan Documents, each of
which shall be in form and substance satisfactory to Agent together with a
certificate of the Secretary of the Administrative Borrower certifying each such
document as being a true, correct, and complete copy thereof;
(aa) Borrowers shall have obtained the key man
life insurance policies required pursuant to Section 6.8(d) and shall have
furnished Collateral Agent with an "Absolute Assignment" for each such policy in
accordance with such Section 6.8(d);
(bb) the Agent shall have received by wire
transfer of immediately available funds any Qualified Cash necessary for
Borrowers to have the Required Availability in accordance with subsection (p)
above;
(cc) the Loan Parties shall have executed Agent's
standard form authorizing Agent to publish a tombstone advertisement with
respect to this transaction; and
(dd) all other documents and legal matters in
connection with the transactions contemplated by this Agreement shall have been
delivered, executed, or recorded and shall be in form and substance satisfactory
to Agent.
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3.2. CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF
CREDIT. The obligation of the Lender Group (or any member thereof) to continue
to make Advances (or otherwise extend credit hereunder) is subject to the
fulfillment, on or before the date applicable thereto, of each of the conditions
subsequent set forth below (the failure by Borrowers to so perform or cause to
be performed constituting an Event of Default):
(a) within 30 days of the Closing Date, deliver
to Agent certified copies of the policies of insurance, together with the
endorsements thereto, as are required by Section 6.8, the form and substance of
which shall be satisfactory to Agent and its counsel,
(b) the Borrowers will use their best efforts to
assist Agent with the syndication of no less than $20,000,000 of the Total
Commitment (the "Syndicated Amount"); the Borrowers acknowledge and agree that
Agent shall have the right, after consultation with the Administrative Borrower,
to alter the interest rates and fees payable with respect to the Syndicated
Amount in order to assist in a successful syndication of such portion of the
Total Commitment,
(c) at least 60 days prior to the expiration of
the collective bargaining agreement referred to in Section 3.1(x), a
satisfactory update of the negotiations for a new collective bargaining
agreement or of alternate plans for continued operation,
(d) within 45 days of the Closing Date, deliver
to Agent a determination of the Enterprise Value of the Parent and its
Subsidiaries, the results of which shall be satisfactory to Agent, such
valuation to be performed by Xxxxx Xxxxxx and Company LLP,
(e) within 30 days of the Closing Date, Agent
shall have received the results of litigation searches with respect to the Loan
Parties specified in Schedule L-2 for the jurisdictions specified in such
Schedule,
(f) not later than 90 days following the Closing
Date, Borrowers shall (i) cause Universal Circulation Services Inc. to be merged
with and into another Loan Party or dissolved and wound up and (ii) deliver to
Agent evidence satisfactory to the Agent that such requirement has been timely
satisfied,
(g) not later than 30 days following the Closing
Date, Borrowers shall cause to be delivered to Agent UCC searches from the
Secretary of State of California and the Secretary of State of Nevada with
respect to Primary News which reflect that each UCC-1 naming Imperial Bank as
secured party has been terminated or has lapsed without being continued,
(h) within 45 days of the Closing Date, Agent
shall have received the results of the Canadian statutory lien searches,
(i) within 30 days of the Closing Date, the Loan
Parties shall have implemented the electronic reporting system described in
Section 6.2g,
(j) within 30 days of the Closing Date, Agent
shall have received a zoning compliance letter (the "Zoning Letter") for the
property located at 0000 Xxxx Xxxx
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Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx, issued by the applicable municipality where
such property is located and in the event the Zoning Letter discloses that such
property is not in compliance with any applicable zoning laws, regulations,
ordinances and/or rules, Borrowers will use commercially reasonable efforts to
cure and correct any such non-compliance with any applicable zoning laws,
regulations, ordinances or rules to the reasonable satisfaction of Agent,
(k) within 30 days of the Closing Date, Agent
shall have received Cash Management Agreements for the Deposit Accounts of the
Canadian Guarantors,
(l) within 30 days of the Closing Date, use
commercially reasonable efforts to provide Agent with a representative sample,
reasonably acceptable to Agent, of the contracts between the retailers and the
publishers related to the In-Store Services/Claiming Accounts arising under the
retail display payment claiming business of US Marketing Services,
(m) not later than November 3, 2003, deliver to
the Collateral Agent Cash Management Agreements executed by Wachovia Bank,
National Association for account no. 2000020370747 and account no. 2000020370750
maintained at such bank,
(n) Borrowers shall use their reasonable efforts
to deliver a fully executed Validity and Support Agreement signed by Xxxxx X.
Xxxxxx, and
(o) Borrowers shall deliver to Agent executed
originals of the other Validity and Support Agreements, in the form previously
negotiated, not later than November 5, 2003.
3.3. CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The
obligation of the Lender Group (or any member thereof) to make any Advances
hereunder at any time (or to extend any other credit hereunder) shall be subject
to the following conditions precedent:
(a) the representations and warranties contained
in this Agreement and the other Loan Documents shall be true and correct in all
material respects on and as of the date of such extension of credit, as though
made on and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(b) no Default or Event of Default shall have
occurred and be continuing on the date of such extension of credit, nor shall
either result from the making thereof;
(c) no injunction, writ, restraining order, or
other order of any nature restricting or prohibiting, directly or indirectly,
the extending of such credit shall have been issued and remain in force by any
Governmental Authority against any Borrower, Agent, any Lender, or any of their
Affiliates; and
(d) no Material Adverse Change shall have
occurred.
3.4. TERM. This Agreement shall continue in full force and
effect for a term ending on October 30, 2006 (the "Maturity Date"). The
foregoing notwithstanding, the Lender Group, upon the election of the Required
Lenders, shall have the right to terminate its obligations
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under this Agreement immediately and without notice upon the occurrence and
during the continuation of an Event of Default.
3.5. EFFECT OF TERMINATION. On the date of termination of
this Agreement, all Obligations (including contingent reimbursement obligations
of Borrowers with respect to any outstanding Letters of Credit and including all
Bank Products Obligations) immediately shall become due and payable without
notice or demand (including (a) either (i) providing cash collateral to be held
by Agent for the benefit of those Lenders with a Revolver Commitment in an
amount equal to 105% of the then extant Letter of Credit Usage, or (ii) causing
the original Letters of Credit to be returned to the Issuing Lender, and (b)
providing cash collateral (in an amount determined by Agent as sufficient to
satisfy the reasonably estimated credit exposure) to be held by Agent for the
benefit of the Bank Product Providers with respect to the then extant Bank
Products Obligations). No termination of this Agreement, however, shall relieve
or discharge Borrowers or their Subsidiaries of their duties, Obligations, or
covenants hereunder and the Collateral Agent's Liens in the Collateral shall
remain in effect until all Obligations have been paid in full and the Lender
Group's obligations to provide additional credit hereunder have been terminated.
When this Agreement has been terminated and all of the Obligations have been
paid in full and the Lender Group's obligations to provide additional credit
under the Loan Documents have been terminated irrevocably, Agent will, at
Borrowers' sole expense, execute and deliver any UCC or PPSA termination
statements, lien releases, mortgage releases, re-assignments of trademarks,
discharges of security interests, and other similar discharge or release
documents (and, if applicable, in recordable form) as are reasonably necessary
to release, as of record, the Collateral Agent's Liens and all notices of
security interests and liens previously filed by Agent with respect to the
Obligations.
3.6. EARLY TERMINATION BY BORROWERS. Borrowers have the
option, at any time upon 90 days prior written notice by Administrative Borrower
to Agent, to terminate this Agreement by paying to Agent, in cash, the
Obligations (including (a) either (i) providing cash collateral to be held by
Agent for the benefit of those Lenders with a Revolver Commitment in an amount
equal to 105% of the then extant Letter of Credit Usage, or (ii) causing the
original Letters of Credit to be returned to the Issuing Lender, and (b)
providing cash collateral (in an amount determined by Agent as sufficient to
satisfy the reasonably estimated credit exposure) to be held by Agent for the
benefit of the Bank Product Providers with respect to the then extant Bank
Products Obligations), in full, together with the Applicable Prepayment Premium
(to be allocated based upon letter agreements between Agent and individual
Lenders). If Administrative Borrower has sent a notice of termination pursuant
to the provisions of this Section, then the Commitments shall terminate and
Borrowers shall be obligated to repay the Obligations (including (a) either (i)
providing cash collateral to be held by Agent for the benefit of those Lenders
with a Revolver Commitment in an amount equal to 105% of the then extant Letter
of Credit Usage, or (ii) causing the original Letters of Credit to be returned
to the Issuing Lender, and (b) providing cash collateral (in an amount
determined by Agent as sufficient to satisfy the reasonably estimated credit
exposure) to be held by Agent for the benefit of the Bank Product Providers with
respect to the then extant Bank Products Obligations), in full, together with
the Applicable Prepayment Premium, on the date set forth as the date of
termination of this Agreement in such notice. In the event of the termination of
this Agreement and repayment of the Obligations at any time prior to the
Maturity Date, for any other reason, including (a) termination upon the election
of the Required Lenders to terminate after the occurrence and
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during the continuation of an Event of Default, (b) foreclosure and sale of
Collateral, (c) sale of the Collateral in any Insolvency Proceeding, or (d)
restructure, reorganization or compromise of the Obligations by the confirmation
of a plan of reorganization, or any other plan of compromise, restructure, or
arrangement in any Insolvency Proceeding, then, in view of the impracticability
and extreme difficulty of ascertaining the actual amount of damages to the
Lender Group or profits lost by the Lender Group as a result of such early
termination, and by mutual agreement of the parties as to a reasonable
estimation and calculation of the lost profits or damages of the Lender Group,
Borrowers shall pay the Applicable Prepayment Premium to Agent (to be allocated
based upon letter agreements between Agent and individual Lenders), measured as
of the date of such termination. Anything to the contrary notwithstanding, the
Applicable Prepayment Premium shall not be payable if the Obligations are paid
in full and this Agreement is terminated within 5 Business Days of a demand for
payment by the Lenders under Section 2.14.
4. [INTENTIONALLY OMITTED.]
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this
Agreement, each Loan Party makes the following representations and warranties to
the Lender Group which shall be true, correct, and complete, in all material
respects, as of the date hereof, and shall be true, correct, and complete, in
all material respects, as of the Closing Date, and at and as of the date of the
making of each Advance (or other extension of credit) made thereafter, as though
made on and as of the date of such Advance (or other extension of credit)
(except to the extent that such representations and warranties relate solely to
an earlier date) and such representations and warranties shall survive the
execution and delivery of this Agreement:
5.1. NO ENCUMBRANCES. Each Loan Party and its Subsidiaries
has good and indefeasible title to their personal property assets and good and
marketable title to their Real Property, in each case, free and clear of Liens
except for Permitted Liens.
5.2. ELIGIBLE ACCOUNTS. The Eligible Accounts are bona
fide existing payment obligations of Account Debtors created by the sale and
delivery of Inventory or the rendition of services to such Account Debtors in
the ordinary course of Loan Parties' business, owed to Eligible Loan Parties
without any known defenses, disputes, offsets, counterclaims, or rights of
return or cancellation. As to each Account that is identified by Administrative
Borrower as an Eligible Account in a borrowing base report submitted to Agent,
such Account is not excluded as ineligible by virtue of one or more of the
excluding criteria set forth in the definition of Eligible Accounts.
5.3. BUSINESS SEGMENTS. Schedule S-1 accurately sets forth
each Business Segment of the Loan Parties and the Subsidiaries of Parent
included in each such Business Segment as of the Closing Date.
5.4. ELIGIBLE EQUIPMENT. All of the Eligible Equipment is
used or held for use in Loan Parties' business and is fit for such purposes. As
to each item of Equipment that is identified from time to time by Administrative
Borrower as Eligible Equipment, such Equipment
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is not excluded as ineligible by virtue of one or more of the excluding criteria
set forth in the definition of Eligible Equipment.
5.5. LOCATION OF INVENTORY AND EQUIPMENT. The Inventory
and Equipment of Borrowers and their Subsidiaries are located only at, or
in-transit between, the locations identified on Schedule 5.5 (as such Schedule
may be updated pursuant to Section 6.9), and the Equipment of the Loan Parties
are not stored with a bailee, warehouseman, or similar party.
5.6. INVENTORY RECORDS. Each Loan Party keeps correct,
accurate and reasonably detailed records of its and its Subsidiaries' Inventory
and the book value thereof.
5.7. STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE
OFFICE; FEIN; ORGANIZATIONAL ID NUMBER; COMMERCIAL TORT CLAIMS.
(a) The jurisdiction of organization of each
Loan Party is set forth on Schedule 5.7(a).
(b) The chief executive office of each Loan
Party is located at the address indicated on Schedule 5.7(b) (as such Schedule
may be updated pursuant to Section 6.9).
(c) Each Loan Party's FEIN and organizational
identification number, if any, are identified on Schedule 5.7(c).
(d) As of the Closing Date, Loan Parties and
their Subsidiaries do not hold any commercial tort claims, except as set forth
on Schedule 5.7(d).
5.8. DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each Loan Party is duly organized and
existing and in good standing under the laws of the jurisdiction of its
organization and qualified to do business in any state where the failure to be
so qualified reasonably could be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete
and accurate description of the authorized capital Stock of each Loan Party, by
class, and, as of the Closing Date, a description of the number of shares of
each such class that are issued and outstanding. Other than as described on
Schedule 5.8(b), there are no subscriptions, options, warrants, or calls
relating to any shares of each Loan Party's capital Stock, including any right
of conversion or exchange under any outstanding security or other instrument. No
Loan Party is subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any shares of its capital Stock or any security
convertible into or exchangeable for any of its capital Stock.
5.9. DUE AUTHORIZATION; NO CONFLICT.
(a) As to each Borrower, the execution,
delivery, and performance by such Borrower of this Agreement and the other Loan
Documents to which it is a party have been duly authorized by all necessary
action on the part of such Borrower.
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(b) As to each Borrower, the execution,
delivery, and performance by such Borrower of this Agreement and the other Loan
Documents to which it is a party do not and will not (i) violate any provision
of federal, state, or local law or regulation applicable to any Borrower, the
Governing Documents of any Borrower, or any order, judgment, or decree of any
court or other Governmental Authority binding on any Borrower, (ii) conflict
with, result in a breach of, or constitute (with due notice or lapse of time or
both) a default under any material contractual obligation of any Borrower, (iii)
result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of Borrower, other than Permitted
Liens, or (iv) require any approval of any Borrower's interestholders or any
approval or consent of any Person under any material contractual obligation of
any Borrower, other than consents or approvals that have been obtained and that
are still in force and effect.
(c) Other than the filing of financing
statements, the recordation of the Mortgages and the filing of a notice on form
8-K with the SEC regarding this transaction, the execution, delivery, and
performance by each Borrower of this Agreement and the other Loan Documents to
which such Borrower is a party do not and will not require any registration
with, consent, or approval of, or notice to, or other action with or by, any
Governmental Authority, other than consents or approvals that have been obtained
and that are still in force and effect.
(d) As to each Borrower, this Agreement and the
other Loan Documents to which such Borrower is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by such Borrower
will be the legally valid and binding obligations of such Borrower, enforceable
against such Borrower in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors'
rights generally.
(e) The Collateral Agent's Liens are validly
created, perfected, and first priority Liens, subject only to Permitted Liens
(f) The execution, delivery, and performance by
each Guarantor of the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of such Guarantor.
(g) The execution, delivery, and performance by
each Guarantor of the Loan Documents to which it is a party do not and will not
(i) violate any provision of federal, state, or local law or regulation
applicable to such Guarantor, the Governing Documents of such Guarantor, or any
order, judgment, or decree of any court or other Governmental Authority binding
on such Guarantor, (ii) conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under any material
contractual obligation of such Guarantor, (iii) result in or require the
creation or imposition of any Lien of any nature whatsoever upon any properties
or assets of such Guarantor, other than Permitted Liens, or (iv) require any
approval of such Guarantor's interestholders or any approval or consent of any
Person under any material contractual obligation of such Guarantor, other than
consents or approvals that have been obtained and that are still in force and
effect.
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(h) Other than the filing of financing
statements and the recordation of the Mortgages, the execution, delivery, and
performance by each Guarantor of the Loan Documents to which such Guarantor is a
party do not and will not require any registration with, consent, or approval
of, or notice to, or other action with or by, any Governmental Authority, other
than consents or approvals that have been obtained and that are still in force
and effect.
(i) The Loan Documents to which each Guarantor
is a party, and all other documents contemplated hereby and thereby, when
executed and delivered by such Guarantor will be the legally valid and binding
obligations of such Guarantor, enforceable against such Guarantor in accordance
with their respective terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or limiting creditors' rights generally.
5.10. LITIGATION. Other than those matters disclosed on
Schedule 5.10, there are no actions, suits, or proceedings pending or, to the
best knowledge of Borrowers, threatened against Loan Parties, or any of their
Subsidiaries, as applicable, except for (a) matters that are fully covered by
insurance (subject to customary deductibles), (b) matters that if decided
adversely to any Loan Party could not reasonably be expected to result in
liability to the Loan Parties of $500,000 in the aggregate for all such matters,
and (c) matters arising after the Closing Date that, if decided adversely to
Loan Parties, or any of their Subsidiaries, as applicable, reasonably could not
be expected to result in a Material Adverse Change.
5.11. NO MATERIAL ADVERSE CHANGE. All financial statements
relating to Loan Parties and their Subsidiaries that have been delivered by Loan
Parties to the Lender Group have been prepared in accordance with GAAP (except,
in the case of unaudited financial statements, for the lack of footnotes and
being subject to year-end audit adjustments) and present fairly in all material
respects, Loan Parties' and their Subsidiaries' financial condition as of the
date thereof and results of operations for the period then ended. There has not
been a Material Adverse Change with respect to Loan Parties and their
Subsidiaries since the date of the latest financial statements submitted to the
Lender Group on or before the Closing Date.
5.12. FRAUDULENT TRANSFER.
(a) Each Loan Party and each Subsidiary of a
Borrower is Solvent.
(b) No transfer of property is being made by any
Loan Party or any Subsidiary of a Loan Party and no obligation is being incurred
by any Loan Party or any Subsidiary of a Loan Party in connection with the
transactions contemplated by this Agreement or the other Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of Loan
Parties or their Subsidiaries.
5.13. EMPLOYEE BENEFITS.
(a) None of Loan Parties, any of their
Subsidiaries, or any of their ERISA Affiliates maintains or contributes to any
Benefit Plan, other than those listed on Schedule 5.13.
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(b) Each Loan Party, each of its Subsidiaries
and each ERISA Affiliate have satisfied the minimum funding standards of ERISA
and the IRC with respect to each Benefit Plan to which it is obligated to
contribute.
(c) No ERISA Event has occurred nor has any
other event occurred that may result in an ERISA Event that reasonably could be
expected to result in a Material Adverse Change.
(d) No Loan Party or its Subsidiaries or any
ERISA Affiliate is required to provide security to any Benefit Plan under
Section 401(a)(29) of the IRC.
(e) Except as set forth in Schedule 5.13, no
Canadian Guarantor, has, or is subject to, any present or future obligation or
liability under, any pension plan, deferred compensation plan, retirement income
plan, stock option or stock purchase plan, profit sharing plan, bonus plan or
policy, employee group insurance plan, program policy or practice, formal or
informal, with respect to its employees.
(f) All obligations regarding the Employee Plans
have been satisfied, there are no outstanding defaults or violations by any part
to any Employee Plan and no taxes, penalties or fees are owing or eligible under
any of the Employee Plans.
(g) Except as disclosed in Schedule 5.13, each
Employee Plan is fully funded or fully insured on both an ongoing and solvency
basis pursuant to the actuarial assumptions and methodology set out in Schedule
5.13.
(h) Except as disclosed in Schedule 5.13, none
of the Employee Plans provides benefits to retired employees or to the
beneficiaries or dependents of retired employees.
5.14. ENVIRONMENTAL CONDITION. Except as set forth on
Schedule 5.14, (a) to any Loan Party's knowledge, none of Loan Parties' or their
Subsidiaries' properties or assets has ever been used by Loan Parties, their
Subsidiaries, or by previous owners or operators in the disposal of, or to
produce, store, handle, treat, release, or transport, any Hazardous Materials,
where such production, storage, handling, treatment, release or transport was in
violation, in any material respect, of applicable Environmental Law, (b) to any
Loan Party's knowledge, none of Loan Parties' nor their Subsidiaries' properties
or assets has ever been designated or identified in any manner pursuant to any
environmental protection statute as a Hazardous Materials disposal site, (c)
none of Loan Parties nor any of their Subsidiaries have received notice that a
Lien arising under any Environmental Law has attached to any revenues or to any
Real Property owned or operated by Loan Parties or their Subsidiaries, and (d)
none of Loan Parties nor any of their Subsidiaries have received a summons,
citation, order, notice, notice of Environmental Action, or directive from the
Environmental Protection Agency or any other Governmental Authority concerning
any action or omission by any Loan Party or any Subsidiary of a Loan Party
resulting in the releasing or disposing of Hazardous Materials into the
environment.
5.15. BROKERAGE FEES. Loan Parties and their Subsidiaries
have not utilized the services of any broker or finder in connection with
obtaining financing from the Lender Group under this Agreement and no brokerage
commission or finders fee is payable by Loan Parties or their Subsidiaries in
connection herewith.
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5.16. INTELLECTUAL PROPERTY. Each Loan Party and each
Subsidiary of a Loan Party owns, or holds licenses in, all trademarks, trade
names, copyrights, patents, patent rights, and licenses that are necessary to
the conduct of its business as currently conducted. Attached hereto as Schedule
5.16 (as updated from time to time) is a true, correct, and complete listing of
all material patents, patent applications, trademarks, trademark applications,
copyrights, and copyright registrations as to which each Loan Party or one of
its Subsidiaries is the owner or is an exclusive licensee.
5.17. LEASES. Loan Parties and their Subsidiaries enjoy
peaceful and undisturbed possession under all leases material to their business
and to which they are parties or under which they are operating. All of such
leases are valid and subsisting and no material default by Loan Parties or their
Subsidiaries exists under any of them.
5.18. DDAs. Set forth on Schedule 5.18 are all of Loan
Parties' and their Subsidiaries' Deposit Accounts and Securities Accounts,
including, with respect to each bank or securities intermediary (i) the name and
address of such Person, and (ii) the account numbers of the Deposit Accounts or
Securities Accounts maintained with such Person.
5.19. COMPLETE DISCLOSURE. All factual information (taken
as a whole) furnished by or on behalf of Loan Parties or their Subsidiaries in
writing to Agent or any Lender (including all information contained in the
Schedules hereto or in the other Loan Documents) for purposes of or in
connection with this Agreement, the other Loan Documents or any transaction
contemplated herein or therein is, and all other such factual information (taken
as a whole) hereafter furnished by or on behalf of Loan Parties or their
Subsidiaries in writing to the Agent or any Lender will be, true and accurate in
all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to make
such information (taken as a whole) not misleading in any material respect at
such time in light of the circumstances under which such information was
provided. On the Closing Date, the Closing Date Business Plan represents, and as
of the date on which any other Projections are delivered to Agent, such
additional Projections represent Loan Parties' good faith best estimate of their
and their Subsidiaries' future performance for the periods covered thereby.
5.20. INDEBTEDNESS. Set forth on Schedule 5.20 is a true
and complete list of all Indebtedness of each Loan Party outstanding immediately
prior to the Closing Date that is to remain outstanding after the Closing Date
and the aggregate principal amount of such Indebtedness as of the Closing Date
and the principal terms thereof (interest rate, amortization schedule and term)
are accurately set forth in such Schedule.
5.21. REGULATION U. None of the Loan Parties is nor will be
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulations T, U or X of the Board
of Governors of the Federal Reserve System), and no proceeds of any Advance or
the Term Loan (or other extension of credit hereunder) will be used to purchase
or carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
5.22. PERMITS, ETC. Each Loan Party has, and is in
compliance with, all permits, licenses, franchises, authorizations, approvals,
entitlements and accreditations required
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for such Person lawfully to own, lease, manage or operate, or to acquire, each
business and the Real Property currently owned, leased, managed or operated, or
to be acquired, by such Person except for such permits, licenses, franchises,
authorizations, approvals, entitlements and accreditations the absence of which
could not reasonably be expected to result in a Material Adverse Change. No
condition exists or event has occurred which, in itself or with the giving of
notice or lapse of time or both, would result in the suspension, revocation,
impairment, forfeiture or non-renewal of any such permit, license, franchises,
authorization, approval, entitlement or accreditation, and to Loan Parties'
knowledge, there is no claim that any thereof is not in full force and effect.
5.23. MATERIAL CONTRACTS. Set forth on Schedule 5.23 is a
complete and accurate list as of the Closing Date of all Material Contracts of
the Loan Parties, showing the parties and subject matter thereof and amendments
and modifications thereto. Each such Material Contract (i) is in full force and
effect and is binding upon and enforceable against each Loan Party that is a
party thereto and, to Loan Parties' knowledge, all other parties thereto in
accordance with its terms, (ii) has not been otherwise amended or modified, and
(iii) is not in default due to the action of any Loan Party or, to Loan Parties'
knowledge, any other party thereto, except for such defaults that could not
reasonably be expected to result in a Material Adverse Change.
5.24. EMPLOYEE AND LABOR MATTERS. Except in each case where
any such matter could not reasonably be expected to result in a Material Adverse
Change, there is (a) no unfair labor practice complaint pending or, to Loan
Parties' knowledge, threatened against any Loan Party before any Governmental
Authority and no grievance or arbitration proceeding pending or threatened
against any Loan Party which arises out of or under any collective bargaining
agreement, (b) no strike, labor dispute, slowdown, stoppage or similar action or
grievance pending or, to the best knowledge of Loan Parties, threatened against
any Loan Party and (c) no union representation question existing with respect to
the employees of any Loan Party and no union organizing activity taking place
with respect to any of the employees of any of them. Neither any Loan Party nor
any ERISA Affiliate of any Loan Party has incurred any liability or obligation
under the Worker Adjustment and Retraining Notification Act ("WARN") or similar
state law, which remains unpaid or unsatisfied. The hours worked and payments
made to employees of each Loan Party have not been in violation of the Fair
Labor Standards Act or any other applicable legal requirements. All material
payments due from any Loan Party on account of workers compensation, wages and
employee health and welfare insurance and other benefits have been paid or
accrued as a liability on the books of such Loan Party.
5.25. CUSTOMERS AND SUPPLIERS. There exists no actual or,
to Loan Parties' knowledge, threatened termination, cancellation or limitation
of, or modification to or change in, the business relationship between (a) any
Loan Party, on the one hand, and any customer or any group thereof, on the other
hand or (b) any Loan Party, on the one hand, and any supplier thereof or
distributor therefor, on the other hand, which termination, cancellation,
limitation, modification or change in any such case could, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Change.
5.26. PAYMENTS TO EMPLOYEES AND OTHER. Each Canadian
Guarantor has paid or accrued as a liability on the books of such Canadian
Guarantor, all material payments due
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from any Canadian Guarantor to any employee, independent contractor or
Governmental Authority on account of workers' compensation, wages or other
compensation and, as applicable, employee health and welfare insurance and other
benefits.
5.27. WITHHOLDINGS AND REMITTANCES. Each Canadian Guarantor
has withheld from each payment made to any of its present or former employees,
officers and directors, and to all persons who are non-residents of Canada for
the purposes of the Canadian Income Tax Act all amounts required by law to be
withheld, including without limitation all payroll deductions required to be
withheld, and furthermore, has remitted such withheld amounts within the
prescribed periods to the appropriate Governmental Authority. Each Canadian
Guarantor has remitted all Canada pension Plan contributions, provincial pension
plan contributions, employment insurance premiums, employer health taxes and
other taxes payable by it in respect of its employees and has remitted such
amounts to the proper Governmental Authority within the time required under the
applicable law.
6. AFFIRMATIVE COVENANTS.
Each Loan Party covenants and agrees that, until termination
of all of the Commitments and payment in full of the Obligations, each Loan
Party shall and shall cause each of its respective Subsidiaries to do all of the
following:
6.1. ACCOUNTING SYSTEM. Maintain a system of accounting
that enables Loan Parties to produce financial statements in accordance with
GAAP and maintain records pertaining to the Collateral that contain information
as from time to time reasonably may be requested by Agent. Loan Parties also
shall keep an inventory reporting system that shows all additions, sales,
claims, returns, and allowances with respect to their and their Subsidiaries'
Inventory.
6.2. COLLATERAL REPORTING. Provide Agent (and if so
requested by Agent, with copies for each Lender) with the following documents at
the following times in form satisfactory to Agent:
Daily (a) a collection journal,
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Weekly (b) a sales journal and credit register since the
last such schedule, a report regarding credit
memoranda that have been issued since the last
such report, and a calculation of the
Borrowing Base as of such date,
(c) notice of all claims, offsets, or disputes
asserted by Account Debtors with respect to
Loan Parties' and their Subsidiaries'
Accounts,
(d) a roll-forward calculation of the Borrowing
Base, provided that with respect to Eligible
Accounts owing by Canadian Account Debtors,
such calculations may, at the option of the
Administrative Borrower, be updated on only a
monthly basis, and
(e) a detailed transaction register for cash,
sales and credits by Business Segment,
Monthly (not later than (f) a detailed aging, by total, of the Accounts of
the 15th day of each Loan Parties, together with a reconciliation
month, except that the to the calculation of the Borrowing Base
first such report shall previously provided to Agent (including detail
be delivered not later regarding those Accounts of Loan Parties that
than November 20, 2003) are not Eligible Accounts), as well as a
roll-forward,
(g) a summary aging, by vendor, of Loan Parties'
and their Subsidiaries' accounts payable and
any book overdraft, together with a report of
accrued expenses and general ledger
reconciliation
(h) a detailed report regarding Loan Parties' and
their Subsidiaries' cash and Cash Equivalents
including an indication of which amounts
constitute Qualified Cash,
(i) a calculation of Dilution, by Business
Segment, for the month most recently ended and
for the three and twelve month periods then
ended,
(j) a calculation of average Excess Availability
for the three-month period then ended,
(k) a month-end gross Accounts to net Accounts
report for the In-Store Services/Wire Business
Segment of the Loan Parties,
(l) a gross receivables aging by job for the
In-Store Services/Wire Business Segment of the
Loan Parties, and
(m) a copy of the report submitted to the issuer
of the Loan Parties' credit insurance policy,
including an aging of foreign customers'
receivables, and including applicable customer
credit insurance limits and limits by country,
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Quarterly (n) a detailed list of each Loan Party's and each
Subsidiary of a Loan Party's customers,
(o) a summary Inventory report of the Loan Parties
by location,
(p) a report regarding each Loan Party's and each
Subsidiary of a Loan Party's accrued, but
unpaid, ad valorem taxes, and
(q) a listing of all new customer or supplier
contracts executed by any Loan Party during
the prior quarter,
Upon request by Agent (r) copies of invoices in connection with Loan
Parties' and their Subsidiaries' Accounts,
credit memos, remittance advices, deposit
slips, shipping and delivery documents in
connection with Loan Parties' and their
Subsidiaries' Accounts and, for Equipment
acquired by Loan Parties or their
Subsidiaries, purchase orders and invoices,
(s) contract reporting in respect of the Wood
Manufacturing Business Segment,
(t) a report in form and substance satisfactory to
the Agent on historical sale-through rates for
the Fulfillment Business Segment, and
(u) such other reports as to the Collateral or the
financial condition of Loan Parties and their
Subsidiaries, as Agent may request.
In addition, each Borrower agrees to cooperate fully with Agent to facilitate
and implement a system of electronic collateral reporting in order to provide
electronic reporting of each of the items set forth above.
6.3. FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver
to Agent, with copies to each Lender:
(a) as soon as available, but in any event
within 30 days (45 days in the case of a month that is the end of one of
Parent's fiscal quarters) after the end of each month during each of Parent's
Fiscal Years,
(i) a company prepared balance sheet, income
statement, and statement of cash flow covering Parent's and its
Subsidiaries' operations during such period, on both a consolidated and
consolidating basis and by Business Segment,
(ii) a certificate signed by the chief financial
officer of Parent to the effect that:
(A) the financial statements
delivered hereunder have been prepared in accordance with GAAP
(except for the lack of footnotes and
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being subject to year-end audit adjustments) and fairly
present in all material respects the financial condition of
Parent and its Subsidiaries,
(B) the representations and
warranties of Loan Parties contained in this Agreement and the
other Loan Documents are true and correct in all material
respects on and as of the date of such certificate, as though
made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier
date), and
(C) there does not exist any
condition or event that constitutes a Default or Event of
Default (or, to the extent of any non-compliance, describing
such non-compliance as to which he or she may have knowledge
and what action Borrowers have taken, are taking, or propose
to take with respect thereto),
(iii) for each month that is the date on which a
financial covenant in Section 7.18 is to be tested, a Compliance
Certificate demonstrating, in reasonable detail, compliance at the end
of such period with the applicable financial covenants contained in
Section 7.18, and
(iv) a general ledger reconciliation,
(b) as soon as available, but in any event
within 90 days after the end of each of Parent's Fiscal Years,
(i) financial statements of Parent and its
Subsidiaries for each such Fiscal Year, on both a consolidated and
consolidating basis and by Business Segment, audited by independent
certified public accountants reasonably acceptable to Agent (it being
understood that such audit may be performed and presented on a
consolidated basis only) and certified, without any qualifications, by
such accountants to have been prepared in accordance with GAAP (such
audited financial statements to include a balance sheet, income
statement, and statement of cash flow and, if prepared, such
accountants' letter to management), and
(ii) a certificate of such accountants addressed
to Agent and the Lenders stating that such accountants do not have
knowledge of the existence of any Default or Event of Default under
Section 7.18,
(c) as soon as available, but in any event
within 30 days prior to the start of each of Parent's Fiscal Years, copies of
Loan Parties' Projections, in form and substance (including as to scope and
underlying assumptions) satisfactory to Agent, in its sole discretion, for the
forthcoming 3 years, year by year, and for the forthcoming Fiscal Year, month by
month, on both a consolidated and consolidating basis and by Business Segment,
certified by the chief financial officer of Parent as being such officer's good
faith best estimate of the financial performance of Parent and its Subsidiaries
during the period covered thereby,
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(d) if and when filed by any Loan Party,
(i) 10-Q quarterly reports, Form 10-K annual
reports, and Form 8-K current reports,
(ii) any other filings made by any Loan Party
with the SEC,
(iii) copies of Loan Parties' federal income tax
returns, and any amendments thereto, filed with the Internal Revenue
Service, and
(iv) any other information that is provided by
Parent to its shareholders generally,
(e) if and when filed by any Loan Party or any
Subsidiary of a Loan Party and as requested by Agent, satisfactory evidence of
payment of applicable excise taxes in each jurisdiction in which (i) any Loan
Party or any Subsidiary of a Loan Party conducts business or is required to pay
any such excise tax, (ii) where any Loan Party's or any Subsidiary of a Loan
Party's failure to pay any such applicable excise tax would result in a Lien on
the properties or assets of such Loan Party or such Subsidiary, or (iii) where
any Loan Party's or any Subsidiary of a Loan Party's failure to pay any such
applicable excise tax reasonably could be expected to result in a Material
Adverse Change,
(f) as soon as a Borrower has knowledge of any
event or condition that constitutes a Default or an Event of Default, notice
thereof and a statement of the curative action that Loan Parties propose to take
with respect thereto,
(g) promptly after the commencement thereof, but
in any event within 5 days after the service of process with respect thereto on
any Loan Party or any Subsidiary of a Loan Party, notice of all actions, suits,
or proceedings brought by or against any Loan Party or any Subsidiary of a Loan
Party before any Governmental Authority which, if determined adversely to such
Loan Party or such Subsidiary, reasonably could be expected to result in a
Material Adverse Change,
(h) (i) promptly and in any event (A) within 10
days after any Loan Party or any ERISA Affiliate thereof knows or has reason to
know that any Termination Event described in clause (i) of the definition of
Termination Event with respect to any Benefit Plan has occurred, (B) within 10
days after any Loan Party or any ERISA Affiliate thereof knows or has reason to
know that any other Termination Event with respect to any Benefit Plan has
occurred, or (C) within 10 days after any Loan Party or any ERISA Affiliate
thereof knows or has reason to know that an accumulated funding deficiency has
been incurred or an application has been made to the Secretary of the Treasury
for a waiver or modification of the minimum funding standard (including
installment payments) or an extension of any amortization period under Section
412 of the IRC or the equivalent provision under any federal, state, local or
foreign counterparts or equivalents thereof with respect to a Benefit Plan, a
statement of an Authorized Person setting forth the details of such occurrence
and the action, if any, which such Loan Party or such ERISA Affiliate propose to
take with respect thereto, (ii) promptly and in any event within 3 days after
receipt thereof by any Loan Party or any ERISA Affiliate thereof from the PBGC,
copies of each notice received by any Loan Party or any ERISA Affiliate thereof
of the
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PBGC's intention to terminate any Plan or to have a trustee appointed to
administer any Plan, (iii) promptly and in any event within 10 days after the
filing thereof with the Internal Revenue Service if requested by Agent, copies
of each Schedule B (Actuarial Information) or the federal, state, local or
foreign equivalent thereof to the annual report (Form 5500 Series) or the
federal, state, local or foreign equivalent thereof with respect to each Benefit
Plan and Multiemployer Plan, (iv) promptly and in any event within 10 days after
any Loan Party or any ERISA Affiliate thereof knows or has reason to know that a
required installment within the meaning of Section 412 of the IRC or the
equivalent provision under any federal, state, local or foreign counterparts or
equivalents thereof has not been made when due with respect to a Benefit Plan,
(v) promptly and in any event within 3 days after receipt thereof by any Loan
Party or any ERISA Affiliate thereof from a sponsor of a Multiemployer Plan or
from the PBGC, a copy of each notice received by any Loan Party or any ERISA
Affiliate thereof concerning the imposition or amount of withdrawal liability
under Section 4202 of ERISA or the equivalent provision under any federal,
state, local or foreign counterparts or equivalents thereof or indicating that
such Multiemployer Plan may enter reorganization status under Section 4241 of
ERISA or the equivalent provision under any federal, state, local or foreign
counterparts or equivalents thereof, and (vi) promptly and in any event within
10 days after any Loan Party or any ERISA Affiliate thereof send notice of a
plant closing or mass layoff (as defined in the Worker Adjustment and Retraining
Notification Act) to employees, copies of each such notice sent by any Loan
Party or any ERISA Affiliate thereof,
(i) immediately upon obtaining knowledge
thereof, notice of the termination of any customer contract or any Material
Contract or any material changes in the terms of any such contract or any
Material Contract, provided that in the case of customer contracts that are not
Material Contracts, this Section 6.3(i) shall not apply to the extent that (i)
any such contract both (A) generated gross revenue of less than $250,000 for the
most recently completed Fiscal Year of the Parent and (B) has a remaining term
of more than one year or (ii) any such contract both (A) generated gross revenue
of less than $500,000 for the most recently completed Fiscal Year of the Parent
and (B) has a remaining term of less than one year,
(j) concurrently with delivery to or receipt
from the Term Loan B Agent or any Term Loan B Lender, a copy of each notice,
demand, report, statement or other document delivered to or received from the
Term Loan B Agent or any Term Loan B Lender (unless otherwise required to be
delivered hereunder), and
(k) upon the request of Agent, any other report
reasonably requested relating to the financial condition of Loan Parties or
their Subsidiaries.
In addition to the financial statements referred to above, Loan Parties agree to
deliver financial statements prepared on both a consolidated and consolidating
basis and agree that no Subsidiary of Parent will have a Fiscal Year different
from that of Parent, provided that each of IPD, Huck NC and Huck Xxxxxx xxx have
the Fiscal Year specified in the definition of such term. Loan Parties agree to
cooperate with Agent to allow Agent to consult with their independent certified
public accountants if Agent reasonably requests the right to do so and that, in
such connection, their independent certified public accountants are authorized
to communicate with Agent and to release to Agent whatever financial information
concerning Loan Parties or their Subsidiaries that Agent reasonably may request.
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6.4. GUARANTOR REPORTS. Cause each Guarantor to deliver
its annual financial statements at the time when Parent provides its audited
financial statements to Agent, but only to the extent such Guarantor's financial
statements are not consolidated with Parent's financial statements, and copies
of all federal income tax returns as soon as the same are available and in any
event no later than 30 days after the same are required to be filed by law.
6.5. RETURNS. Cause returns and allowances as between Loan
Parties and their Subsidiaries and their Account Debtors, to be on the same
basis and in accordance with the usual customary practices of Loan Parties and
their Subsidiaries, as they exist at the time of the execution and delivery of
this Agreement.
6.6. MAINTENANCE OF PROPERTIES. Maintain and preserve all
of their properties which are necessary or useful in the proper conduct to their
business in good working order and condition, ordinary wear and tear excepted,
and comply at all times with the provisions of all leases to which it is a party
as lessee, so as to prevent any loss or forfeiture thereof or thereunder.
6.7. TAXES. Cause all assessments and taxes, whether real,
personal, or otherwise, due or payable by, or imposed, levied, or assessed
against Loan Parties, their Subsidiaries, or any of their respective assets to
be paid in full, before delinquency or before the expiration of any extension
period, except to the extent that (i) the validity of such assessment or tax
shall be the subject of a Permitted Protest or (ii) the aggregate amount payable
for all such assessments and taxes does not exceed $100,000. Loan Parties will
and will cause their Subsidiaries to make timely payment or deposit of all tax
payments and withholding taxes required of them by applicable laws, including
those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state,
provincial and federal income taxes, and will, upon request, furnish Agent with
proof satisfactory to Agent indicating that the applicable Loan Party or
Subsidiary of a Loan Party has made such payments or deposits.
6.8. INSURANCE.
(a) At Loan Parties' expense, maintain insurance
respecting their and their Subsidiaries' assets wherever located, covering loss
or damage by fire, theft, explosion, and all other hazards and risks as
ordinarily are insured against by other Persons engaged in the same or similar
businesses. Loan Parties also shall maintain business interruption, public
liability, and product liability insurance, as well as insurance against
larceny, embezzlement, and criminal misappropriation. All such policies of
insurance shall be in such amounts and with such insurance companies as are
reasonably satisfactory to Agent. Loan Parties shall deliver copies of all such
policies to Agent with a satisfactory lender's loss payable endorsement naming
Agent as sole loss payee or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Agent in the event of cancellation
of the policy for any reason whatsoever.
(b) Administrative Borrower shall give
Collateral Agent prompt notice of any loss covered by such insurance. Collateral
Agent shall have the exclusive right to adjust any losses claimed under any such
insurance policies in excess of $100,000 (or in any amount after the occurrence
and during the continuation of an Event of Default), without any liability to
Loan Parties whatsoever in respect of such adjustments. Any monies received as
payment for
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any loss under any insurance policy mentioned above (other than liability
insurance policies) or as payment of any award or compensation for condemnation
or taking by eminent domain, shall be paid over to Collateral Agent to be
applied at the option of the Required Lenders either to the prepayment of the
Obligations or shall be disbursed to Administrative Borrower under staged
payment terms reasonably satisfactory to the Required Lenders for application to
the cost of repairs, replacements, or restorations. Any such repairs,
replacements, or restorations shall be effected with reasonable promptness and
shall be of a value at least equal to the value of the items or property
destroyed prior to such damage or destruction.
(c) Loan Parties shall not, and shall not suffer
or permit their Subsidiaries to, take out separate insurance concurrent in form
or contributing in the event of loss with that required to be maintained under
this Section 6.8, unless Collateral Agent is included thereon as named insured
with the loss payable to Collateral Agent under a lender's loss payable
endorsement or its equivalent. Administrative Borrower immediately shall notify
Collateral Agent whenever such separate insurance is taken out, specifying the
insurer thereunder and full particulars as to the policies evidencing the same,
and copies of such policies promptly shall be provided to Collateral Agent.
(d) At Borrowers' expense, maintain key man life
insurance policies with respect to the following individuals and in the
following amounts:
Name Amount
---- ------
S. Xxxxxx Xxxxxx $1,000,000
Xxx Xxxxxx $1,000,000
Borrowers shall furnish Collateral Agent with an "Absolute Assignment" of each
such key man life insurance policy, shall record each such "Absolute Assignment"
with the issuer of the respective policy, and shall furnish proof of such
issuer's acceptance of such assignment. All proceeds payable under such key man
life insurance policies shall be payable to Collateral Agent to be applied on
account of the Obligations in accordance with Section 2.4(b).
6.9. LOCATION OF INVENTORY AND EQUIPMENT. Keep Loan
Parties' and their Subsidiaries' Inventory and Equipment only at the locations
identified on Schedule 5.5 and their chief executive offices only at the
locations identified on Schedule 5.7(b); provided, however, that Administrative
Borrower may amend Schedule 5.5 and Schedule 5.7 so long as such amendment
occurs by written notice to Agent not less than 30 days prior to the date on
which such Inventory or Equipment is moved to such new location or such chief
executive office is relocated, so long as such new location is within the
continental United States, and so long as, at the time of such written
notification, the applicable Loan Party provides Collateral Agent a Collateral
Access Agreement for each Leased Real Property used in the manufacturing,
warehousing and distribution operations of the Loan Parties.
6.10. COMPLIANCE WITH LAWS. Comply with the requirements of
all applicable laws, rules, regulations, and orders of any Governmental
Authority, including the Fair Labor
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Standards Act and the Americans With Disabilities Act, other than laws, rules,
regulations, and orders the non-compliance with which, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Change.
6.11. LEASES. Pay when due all rents and other amounts
payable under any leases to which any Loan Party or any Subsidiary of a Loan
Party is a party or by which any Loan Party's or any Subsidiary of a Loan
Party's properties and assets are bound, unless (a) such payments are the
subject of a Permitted Protest or (b) such location is not the corporate
headquarters of the Loan Parties or a location where any books or records with
respect to Collateral or any Collateral with a fair market value of more than
$200,000 is located and the failure to make such payment could not reasonably be
expected to result in a Material Adverse Change.
6.12. EXISTENCE. At all times preserve and keep in full
force and effect each Loan Party's and each Subsidiary of a Loan Party's valid
existence and good standing and any rights and franchises material to their
businesses, except as otherwise permitted under Section 7.3.
6.13. ENVIRONMENTAL.
(a) (i) Keep any property either owned or
operated by any Loan Party or any Subsidiary of a Loan Party free of any
Environmental Liens or post bonds or other financial assurances sufficient to
satisfy the obligations or liability evidenced by such Environmental Liens, (ii)
comply, in all material respects, with Environmental Laws and provide to Agent
documentation of such compliance which Agent reasonably requests, (iii) promptly
notify Agent of any release of a Hazardous Material of any reportable quantity
from or onto property owned or operated by any Loan Party or any Subsidiary of a
Loan Party and take and complete any Remedial Actions required to xxxxx said
release or otherwise to come into compliance with applicable Environmental Law,
and permit Collateral Agent (at the direction of Agent) to participate in the
resolution thereof if so requested by Collateral Agent, in accordance with
subsection (b) below, (iv) promptly, but in any event within 5 days of its
receipt thereof, provide Agent with written notice of any of the following: (A)
notice that an Environmental Lien has been filed against any of the real or
personal property of any Loan Party or any Subsidiary of a Loan Party, (B)
commencement of any Environmental Action or notice that an Environmental Action
will be filed against any Loan Party or any Subsidiary of a Loan Party, and (C)
notice of a violation, citation, or other administrative order which reasonably
could be expected to result in a Material Adverse Change.
(b) Collateral Agent may join and participate
in, as a party if the Collateral Agent so determines, any legal or
administrative proceeding or action concerning the Real Property or any portion
thereof under any Environmental Law, if, in the Agent's reasonable judgment, the
interests of the Lenders shall not be adequately protected by Borrowers;
provided, however, that the Collateral Agent shall not participate in day-to-day
decision making with respect to environmental compliance. Borrowers shall pay or
reimburse Agent and/or Collateral Agent on demand for all reasonable sums
advanced and reasonable expenses incurred (including reasonable attorneys' fees
and disbursements but excluding internal overhead, administrative and similar
costs of the Lenders) by the Lenders in connection with any such action or
proceeding.
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(c) Upon reasonable prior written notice and at
the direction of Agent, the Collateral Agent shall have the right, except as
otherwise provided under Leases, at all reasonable times during normal business
hours to enter upon and inspect all or any portion of the Real Property,
provided that such inspections shall not unreasonably interfere with the
operation or the tenants, residents or occupants of the Real Property. The
inspection rights granted to the Collateral Agent in this subsection shall be in
addition to, and not in limitation of, any other inspection rights granted to
the Agent in this Agreement, and shall expressly include the right (if the Agent
reasonably suspects that Remedial Action may be required) to conduct soil
borings, establish ground water monitoring xxxxx and conduct other customary
environmental test, assessments and audits.
6.14. DISCLOSURE UPDATES. Promptly and in no event later
than 5 Business Days after obtaining knowledge thereof, notify Agent if any
written information, exhibit, or report furnished to the Lender Group contained
any untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made. The foregoing to the contrary notwithstanding,
any notification pursuant to the foregoing provision will not cure or remedy the
effect of the prior untrue statement of a material fact or omission of any
material fact nor shall any such notification have the affect of amending or
modifying this Agreement or any of the Schedules hereto.
6.15. FORMATION OF SUBSIDIARIES. At the time that any
Borrower or any Guarantor forms any direct or indirect Subsidiary or acquires
any direct or indirect Subsidiary after the Closing Date, such Borrower or such
Guarantor shall (a) cause such new Subsidiary to provide to Agent a joinder to
this Agreement and a Security Agreement, together with such other guaranty and
security documents (including Mortgages with respect to any Real Property of
such new Subsidiary), as well as appropriate UCC-1 financing statements and PPSA
registration statements (and with respect to all property subject to a Mortgage,
fixture filings), all in form and substance satisfactory to Agent (including
being sufficient to grant Collateral Agent a first priority Lien (subject to
Permitted Liens) in and to the assets of such newly formed or acquired
Subsidiary), (b) provide to Collateral Agent a pledge agreement and appropriate
certificates and powers or UCC-1 financing statements or PPSA registration
statements, hypothecating all of the direct or beneficial ownership interest in
such new Subsidiary, in form and substance satisfactory to Agent, and (c)
provide to Agent all other documentation, including one or more opinions of
counsel satisfactory to Agent, which in its opinion is appropriate with respect
to the execution and delivery of the applicable documentation referred to above
(including policies of title insurance or other documentation with respect to
all property subject to a Mortgage). Any document, agreement, or instrument
executed or issued pursuant to this Section 6.15 shall be a Loan Document.
6.16. Program Contracts.
(a) On and after the Closing Date, when entering
into agreements with its customers for the programs described in clause (i) of
the definition of "Program Contracts", utilize Program Contracts that contain
the security interest language specified in Exhibit P-1, with such changes as
are acceptable to Agent, provided that it shall not be a breach of this Section
6.16(a) if contracts generating net revenues in an aggregate amount not
exceeding
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$500,000 in any Fiscal Year do not contain the security interest language
specified in Exhibit P-1 or other language acceptable to Agent.
(b) On and after the Closing Date, when entering
into agreements with its customers for the programs described in clause (ii) of
the definition of "Program Contracts", utilize Program Contracts that contain
the xxxx and hold language specified in Exhibit P-1, with such changes as are
acceptable to Agent, provided that it shall not be a breach of this Section
6.16(b) if contracts generating net revenues in an aggregate amount not
exceeding $500,000 in any Fiscal Year do not contain the xxxx and hold language
specified in Exhibit P-1 or other language acceptable to Agent.
7. NEGATIVE COVENANTS.
Each Loan Party covenants and agrees that, until termination
of all of the Commitments and payment in full of the Obligations, such Loan
Party will not and will not permit any of its Subsidiaries to do any of the
following:
7.1. INDEBTEDNESS. Create, incur, assume, suffer to exist,
guarantee, or otherwise become or remain, directly or indirectly, liable with
respect to any Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and
the other Loan Documents, together with Indebtedness owed to Underlying Issuers
with respect to Underlying Letters of Credit;
(b) Indebtedness set forth on Schedule 5.20;
(c) Permitted Purchase Money Indebtedness;
(d) refinancings, renewals, or extensions of
Indebtedness permitted under clauses (b) and (c) of this Section 7.1 (and
continuance or renewal of any Permitted Liens associated therewith) so long as:
(i) the terms and conditions of such refinancings, renewals, or extensions do
not, in Agent's judgment, materially impair the prospects of repayment of the
Obligations by Loan Parties or materially impair Loan Parties' creditworthiness,
(ii) such refinancings, renewals, or extensions do not result in an increase in
the then extant principal amount of, or interest rate with respect to, the
Indebtedness so refinanced, renewed, or extended or add one or more Loan Parties
as liable with respect thereto if such additional Loan Parties were not liable
with respect to the original Indebtedness, (iii) such refinancings, renewals, or
extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, nor are they on terms or
conditions, that, taken as a whole, are materially more burdensome or
restrictive to the applicable Loan Party, (iv) if the Indebtedness that is
refinanced, renewed, or extended was subordinated in right of payment or in lien
priority to the Obligations, then the terms and conditions of the refinancing,
renewal, or extension Indebtedness must be include subordination terms and
conditions that are at least as favorable to the Lender Group as those that were
applicable to the refinanced, renewed, or extended Indebtedness, and (v) the
Indebtedness that is refinanced, renewed, or extended is not recourse to any
Person that is liable on account of the Obligations other than those Persons
which were obligated with respect to the Indebtedness that was refinanced,
renewed, or extended;
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(e) endorsement of instruments or other payment
items for deposit; and
(f) Indebtedness composing Permitted
Investments;
(g) Indebtedness under the Term Loan B Loan
Agreement in an aggregate principal amount not to exceed $15,000,000, less any
portion of the Term Loan B which has been repaid, whether at scheduled maturity,
required or voluntary prepayment or otherwise;
(h) Subordinated Indebtedness; and
(i) other unsecured Indebtedness in an aggregate
principal amount outstanding at any time not to exceed $500,000.
7.2. LIENS. Create, incur, assume, or suffer to exist,
directly or indirectly, any Lien on or with respect to any of its assets, of any
kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens (including Liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is refinanced,
renewed, or extended under Section 7.1(d) and so long as the replacement Liens
only encumber those assets that secured the refinanced, renewed, or extended
Indebtedness).
7.3. RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation,
reorganization, or recapitalization, or reclassify its Stock except (i) for a
Permitted Acquisition and (ii) so long as no Default or Event of Default shall
have occurred and be continuing or would result therefrom, upon the not less
than 30 days prior written notice to Agent, the merger or consolidation of any
Guarantor with or into another Loan Party, or of any Borrower (other than
Parent, IPD or US Marketing) with or into another Borrower.
(b) Liquidate, wind up, or dissolve itself (or
suffer any liquidation or dissolution), provided that, so long as no Default or
Event of Default shall have occurred and be continuing or would result
therefrom, upon not less than 30 days prior written notice to Agent, any
Borrower (other than Parent, IPD or US Marketing) and any Guarantor may dissolve
itself so long as all of its assets are transferred to a Borrower (if the
dissolving entity is a Borrower) or a Guarantor, in each case subject to the
Lien of the Collateral Agent.
(c) Convey, sell, lease, license, assign,
transfer, or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its assets.
7.4. DISPOSAL OF ASSETS. Other than Permitted
Dispositions, convey, sell, lease, license, assign, transfer, or otherwise
dispose of any of the assets of any Loan Party or any Subsidiary of a Loan
Party, provided that, so long as no Default or Event of Default shall have
occurred and be continuing or would result therefrom, upon not less than 30 days
prior written notice to Agent, the Loan Parties may sell all or substantially
all of the assets or Stock of DEYCO pursuant to the terms of the DEYCO Letter of
Intent for a purchase price payable in
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cash (the "DEYCO Sale"), provided further that the Net Cash Proceeds of the
DEYCO Sale are paid to Agent in accordance with Section 2.4(c)(vi).
7.5. CHANGE NAME. Change any Loan Party's or any
Subsidiary of a Loan Party's name, FEIN, organizational identification number,
state of organization, or organizational identity; provided, however, that a
Loan Party or a Subsidiary of a Loan Party may change its name upon at least 30
days prior written notice by Administrative Borrower to Agent of such change and
so long as, at the time of such written notification, such Loan Party or such
Subsidiary provides any financing statements necessary to perfect and continue
perfected Collateral Agent's Liens.
7.6. NATURE OF BUSINESS. Make any change in the principal
nature of their business.
7.7. PREPAYMENTS AND AMENDMENTS. Except in connection with
a refinancing permitted by Section 7.1(d),
(a) prepay, redeem, defease, purchase, or
otherwise acquire or make any payment with respect to the principal of the Term
Loan B, provided that (i) in the case of any mandatory prepayment of the Term
Loan B from Excess Cash Flow, the Loan Parties may prepay all or any portion of
the Term Loan B so long as immediately before and after giving effect to such
payment, no Event of Default shall have occurred and be continuing, (ii) the
Loan Parties may prepay up to $2,500,000 of the principal amount of the Term
Loan B so long as (A) the Term Loan has been repaid in full, (B) the In-Store
Services Subline Amount has been reduced to $17,500,000 or a lesser amount in
accordance with the definition for such term, (C) (x) average Excess
Availability is at least $10,000,000 for the 30 consecutive day period
immediately prior to the date of such prepayment and (y) Excess Availability is
at least $10,000,000 immediately after giving effect to such prepayment, and (D)
immediately before and immediately after giving effect to such prepayment, no
Event of Default shall have occurred and be continuing, and (iii) in all other
cases, the Loan Parties may prepay all or any portion of the principal amount of
the Term Loan B so long as (A) the Term Loan has been repaid in full, (B) the
In-Store Services Subline Amount has been reduced to $12,500,000 or a lesser
amount in accordance with the definition for such term, (C) (x) average Excess
Availability is at least $10,000,000 for the 30 consecutive day period
immediately prior to the date of such prepayment and (y) Excess Availability is
at least $10,000,000 immediately after giving effect to such prepayment, and (D)
immediately before and immediately after giving effect to such prepayment, no
Event of Default shall have occurred and be continuing,
(b) prepay, redeem, defease, purchase, or
otherwise acquire any Indebtedness of any Loan Party or any subsidiary of a Loan
Party (other than the Term Loan B), other than the Obligations in accordance
with this Agreement, provided that the Loan Parties may prepay in full the Myco
IRB in an aggregate amount not to exceed $4,277,672, so long as (i) the Letter
of Credit issued on the Closing Date in the amount of $4,277,671.65, naming Bank
of America, N.A. as beneficiary, and issued for the purpose of securing letter
of credit no. 3022930 dated February 8, 2000, issued by Bank of America, N.A. in
connection with the Myco IRB, or (ii) any Letter of Credit issued in replace of
the Letter of Credit described in clause (i),
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shall be returned for cancellation, on terms and conditions acceptable to Agent,
in connection with such payment,
(c) directly or indirectly, amend, modify,
alter, increase, or change any of the terms or conditions of any agreement,
instrument, document, indenture, or other writing evidencing or concerning
Indebtedness permitted under Section 7.1(b) or (c), or
(d) to the extent prohibited by the
Intercreditor and Collateral Agency Agreement, directly or indirectly, amend,
modify, alter, increase, or change any of the terms or conditions of any
agreement, instrument, document, indenture, or other writing evidencing or
concerning Indebtedness permitted under Section 7.1(g).
7.8. CHANGE OF CONTROL. Cause, permit, or suffer, directly
or indirectly, any Change of Control.
7.9. CONSIGNMENTS. Other than for the Fulfillment Business
Segments, consign any of their Inventory or sell any of their Inventory on xxxx
and hold, sale or return, sale on approval, or other conditional terms of sale,
provided that xxxx and hold sales may be made in compliance with Section
6.16(b).
7.10. DISTRIBUTIONS. Other than distributions or
declaration and payment of dividends by a Loan Party to another Loan Party, make
any distribution or declare or pay any dividends (in cash or other property,
other than common Stock) on, or purchase, acquire, redeem, or retire any of any
Loan Party's Stock, of any class, whether now or hereafter outstanding.
7.11. ACCOUNTING METHODS. Modify or change their Fiscal
Year or their method of accounting (other than as may be required to conform to
GAAP) or enter into, modify, or terminate any agreement currently existing, or
at any time hereafter entered into with any third party accounting firm or
service bureau for the preparation or storage of Loan Parties' or their
Subsidiaries' accounting records without said accounting firm or service bureau
agreeing to provide Agent information regarding Loan Parties' and their
Subsidiaries' financial condition.
7.12. INVESTMENTS. Except for Permitted Investments and
Permitted Acquisitions, directly or indirectly, enter into any Acquisition, or
make or acquire any Investment, or incur any liabilities (including contingent
obligations) for or in connection with any Investment; provided, however, that
Administrative Borrower and its Subsidiaries shall not have Permitted
Investments (other than in the Cash Management Accounts) in Deposit Accounts or
Securities Accounts in an aggregate amount in excess of $50,000 outstanding at
any one time unless Administrative Borrower or its Subsidiary, as applicable,
and the applicable securities intermediary or bank have entered into Control
Agreements or similar arrangements governing such Permitted Investments in order
to perfect (and further establish) the Collateral Agent's Liens in such
Permitted Investments. Subject to the foregoing proviso, Loan Parties shall not,
and shall not permit their Subsidiaries to, establish or maintain any Deposit
Account or Securities Account unless Agent shall have received a Control
Agreement in respect of such Deposit Account or Securities Account.
7.13. TRANSACTIONS WITH AFFILIATES. Directly or indirectly
enter into or permit to exist any transaction with any Affiliate of any Loan
Party except for transactions that are in
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the ordinary course of Loan Parties' business, upon fair and reasonable terms,
that are fully disclosed to Agent, and that are no less favorable to Loan
Parties than would be obtained in an arm's length transaction with a
non-Affiliate.
7.14. SUSPENSION. Suspend or go out of a substantial
portion of their business, other than in connection with a sale or other
disposition permitted under Section 7.4 or a transaction described in and
permitted by Section 7.3.
7.15. [INTENTIONALLY OMITTED].
7.16. USE OF PROCEEDS. Use the proceeds of the Advances and
the Term Loan for any purpose other than (a) on the Closing Date, (i) to repay
in full the outstanding principal, accrued interest, and accrued fees and
expenses owing to Existing Lenders, and (ii) to pay transactional fees, costs,
and expenses incurred in connection with this Agreement, the other Loan
Documents, and the transactions contemplated hereby and thereby, and (b)
thereafter, consistent with the terms and conditions hereof, for its lawful and
permitted purposes.
7.17. EQUIPMENT WITH BAILEES. Store the Equipment of Loan
Parties or their Subsidiaries at any time now or hereafter with a
bailee, warehouseman, or similar party without Agent's prior written
consent.
7.18. FINANCIAL COVENANTS.
(a) Fail to maintain or achieve:
(i) MINIMUM EBITDA. EBITDA, measured on a
month-end basis for the applicable period set forth below of at least the
applicable amount set forth below opposite such period:
-----------------------------------------------------------------------
Applicable Period Applicable Amount
-----------------------------------------------------------------------
For the three months ended 10/31/03 $ 5,700,000
-----------------------------------------------------------------------
For the four months ended 11/30/03 $ 6,725,000
-----------------------------------------------------------------------
For the five months ended 12/31/03 $ 7,450,000
-----------------------------------------------------------------------
For the six months ended 1/31/04 $ 9,720,000
-----------------------------------------------------------------------
For the seven months ended 2/28/04 $10,860,000
-----------------------------------------------------------------------
For the eight months ended 3/31/04 $12,000,000
-----------------------------------------------------------------------
For the nine months ended 4/30/04 $14,055,000
-----------------------------------------------------------------------
For the ten months ended 5/31/04 $16,585,000
-----------------------------------------------------------------------
For the eleven months ended 6/30/04 $17,120,000
-----------------------------------------------------------------------
For the twelve months ended 7/31/04 $19,625,000
-----------------------------------------------------------------------
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-----------------------------------------------------------------------
Applicable Period Applicable Amount
-----------------------------------------------------------------------
For the twelve months ended 8/31/04 $20,130,000
-----------------------------------------------------------------------
For the twelve months ended 9/30/04 $20,635,000
-----------------------------------------------------------------------
For the twelve months ended 10/31/04 $20,410,000
-----------------------------------------------------------------------
For the twelve months ended 11/30/04 $21,165,000
-----------------------------------------------------------------------
For the twelve months ended 12/31/04 $22,215,000
-----------------------------------------------------------------------
For the twelve months ended 1/31/05 $22,495,000
-----------------------------------------------------------------------
For the twelve months ended 2/28/05 $22,835,000
-----------------------------------------------------------------------
For the twelve months ended 3/31/05 and $23,000,000
for each twelve month period thereafter
-----------------------------------------------------------------------
(ii) FIXED CHARGE COVERAGE RATIO. A Fixed Charge
Coverage Ratio, measured on a month-end basis for the applicable period set
forth below, of at least the required amount set forth below opposite such
period:
----------------------------------------------------------------------
Applicable Period Applicable Ratio
----------------------------------------------------------------------
For the three months ended 10/31/03 4.0 to 1.0
----------------------------------------------------------------------
For the four months ended 11/30/03 3.3 to 1.0
----------------------------------------------------------------------
For the five months ended 12/31/03 2.8 to 1.0
----------------------------------------------------------------------
For the six months ended 1/31/04 2.9 to 1.0
----------------------------------------------------------------------
For the seven months ended 2/28/04 2.7 to 1.0
----------------------------------------------------------------------
For the eight months ended 3/31/04 2.6 to 1.0
----------------------------------------------------------------------
For the nine months ended 4/30/04 2.7 to 1.0
----------------------------------------------------------------------
For the ten months ended 5/31/04 2.1 to 1.0
----------------------------------------------------------------------
For the eleven months ended 6/30/04 2.0 to 1.0
----------------------------------------------------------------------
For the twelve months ended 7/31/04 2.1 to 1.0
----------------------------------------------------------------------
For the twelve months ended 8/31/04 2.1 to 1.0
----------------------------------------------------------------------
For the twelve months ended 9/30/04 2.2 to 1.0
----------------------------------------------------------------------
For the twelve months ended 10/31/04 2.1 to 1.0
----------------------------------------------------------------------
For the twelve months ended 11/30/04 2.1 to 1.0
----------------------------------------------------------------------
For the twelve months ended 12/31/04 2.2 to 1.0
----------------------------------------------------------------------
For the twelve months ended 1/31/05 2.3 to 1.0
----------------------------------------------------------------------
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----------------------------------------------------------------------
Applicable Period Applicable Ratio
----------------------------------------------------------------------
For the twelve months ended 2/28/05 2.3 to 1.0
----------------------------------------------------------------------
For the twelve months ended 3/31/05 2.3 to 1.0
----------------------------------------------------------------------
For the twelve months ended 4/30/05 2.3 to 1.0
----------------------------------------------------------------------
For the twelve months ended 5/31/05 2.3 to 1.0
----------------------------------------------------------------------
For the twelve months ended 6/30/05 2.4 to 1.0
----------------------------------------------------------------------
For the twelve months ended 7/31/05 2.4 to 1.0
----------------------------------------------------------------------
For the twelve months ended 8/31/05 2.4 to 1.0
----------------------------------------------------------------------
For the twelve months ended 9/30/05 2.5 to 1.0
----------------------------------------------------------------------
For the twelve months ended 10/31/05 and 2.5 to 1.0
each twelve month period thereafter
----------------------------------------------------------------------
(b) Permit:
(i) SENIOR DEBT RATIO. The Senior Debt Ratio at
any time during the applicable period set forth below to exceed the applicable
ratio set forth below opposite such period:
-------------------------------------------------------------------------
Applicable Period Applicable Ratio
-------------------------------------------------------------------------
At any time on and after November 30, 2003 3.25 to 1.0
and to and including May 31, 2004
-------------------------------------------------------------------------
At any time after May 31, 2004 and prior to November 3.0 to 1.0
30, 2004
-------------------------------------------------------------------------
At any time on and after November 30, 2004 2.7 to 1.0
-------------------------------------------------------------------------
(ii) WFF DEBT RATIO. The WFF Debt Ratio at any
time during the applicable period set forth below to exceed the applicable ratio
set forth below opposite such period:
-----------------------------------------------------------------------
Applicable Period Applicable Ratio
-----------------------------------------------------------------------
At any time on or prior to April 30, 2004 2.75 to 1.0
-----------------------------------------------------------------------
At any time after April 30, 2004 and on or prior to 2.5 to 1.0
October 31, 2004
-----------------------------------------------------------------------
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-----------------------------------------------------------------------
Applicable Period Applicable Ratio
-----------------------------------------------------------------------
At any time after October 31, 2004 and on or prior to 2.3 to 1.0
December 31, 2004
-----------------------------------------------------------------------
At any time after December 31, 2004 2.1 to 1.0
-----------------------------------------------------------------------
(c) Make:
(i) CAPITAL EXPENDITURES. Capital expenditures
(excluding expenditures made for Permitted Acquisitions) in any Fiscal Year in
excess of the amount set forth in the following table for the applicable period:
---------------------------------------------------------------------------------
Six Month Period ending Fiscal Year 2006 and
ending January 31, each Fiscal Year
2004 Fiscal Year 2005 Thereafter
---------------------------------------------------------------------------------
$1,500,000 $2,800,000 $3,400,000
---------------------------------------------------------------------------------
7.19. BUSINESS SEGMENTS. Make any changes with respect to
the Business Segments of the Loan Parties, and the identities of the
Subsidiaries included in each such Business Segment, from the structure set
forth in Schedule S-1.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
event of default (each, an "Event of Default") under this Agreement:
8.1. If Loan Parties fail to pay when due and payable or
when declared due and payable, all or any portion of the Obligations (whether of
principal, interest (including any interest which, but for the provisions of the
Bankruptcy Code, would have accrued on such amounts), fees and charges due the
Lender Group, reimbursement of Lender Group Expenses, or other amounts
constituting Obligations);
8.2. If any Loan Party:
(a) fails to perform, keep, or observe any term,
provision, covenant, or agreement contained in Sections 2.7, 3.2, 6.7, 6.8,
6.10, 6.12, 6.15, 6.16 and 7.1 through 7.19 of this Agreement;
(b) fails or neglects to perform, keep, or
observe any term, provision, covenant, or agreement contained in 6.2, 6.3, 6.5,
6.6, 6.9, 6.11, and 6.14 of this Agreement and such failure continues for a
period of 5 Business Days; or
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(c) fails or neglects to perform, keep, or
observe any other term, provision, covenant, or agreement contained in this
Agreement, or in any of the other Loan Documents (giving effect to any grace
periods, cure periods, or required notices, if any, expressly provided for in
such Loan Documents); in each case, other than any such term, provision,
covenant, or agreement that is the subject of another provision of this Section
8 (in which event such other provision of this Section 8 shall govern), and such
failure continues for a period of 10 Business Days;
provided that, during any period of time that any such failure or neglect
referred to in this paragraph exists, even if such failure or neglect is not yet
an Event of Default, Lenders shall be relieved of their obligation to extend
credit hereunder
8.3. If any material portion of any Loan Party's assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any third Person;
8.4. If an Insolvency Proceeding is commenced by any Loan
Party or any Subsidiary of a Loan Party;
8.5. If an Insolvency Proceeding is commenced against any
Loan Party or any Subsidiary of a Loan Party, and any of the following events
occur: (a) the applicable Loan Party or Subsidiary consents to the institution
of the Insolvency Proceeding against it, (b) the petition commencing the
Insolvency Proceeding is not timely controverted; provided, however, that,
during the pendency of such period, each member of the Lender Group shall be
relieved of its obligations to extend credit hereunder, (c) the petition
commencing the Insolvency Proceeding is not dismissed within 45 calendar days of
the date of the filing thereof; provided, however, that, during the pendency of
such period, each member of the Lender Group shall be relieved of its obligation
to extend credit hereunder, (d) an interim trustee is appointed to take
possession of all or any substantial portion of the properties or assets of, or
to operate all or any substantial portion of the business of, any Loan Party or
any Subsidiary of a Loan Party, or (e) an order for relief shall have been
entered therein;
8.6. If any Loan Party or any Subsidiary of a Loan Party
is enjoined, restrained, or in any way prevented by court order from continuing
to conduct all or any material part of its business affairs;
8.7. (a) If a notice of Lien is filed of record with
respect to a Loan Party's assets or any of its Subsidiaries' assets by the
United States or any department, agency, or instrumentality thereof (a "Federal
Lien"), or by any state, county, municipal, or governmental agency and such
state, county, municipal, or governmental agency Lien has priority over the
Liens of the Collateral Agent in and to the Collateral or any portion thereof (a
"Non-Federal Priority Lien"); or
(b) If a notice of Lien is filed of record with
respect to a Loan Party' assets or any of its Subsidiaries' assets by any state,
county, municipal, or governmental agency that is not a Non-Federal Priority
Lien (a "Non-Federal Non-Priority Lien"); provided, however, that, if the
aggregate amount claimed with respect to any such Non-Federal Non-Priority
Liens,
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or combination thereof, is less than $100,000, an Event of Default shall not
occur under this subsection if the claims that are the subject of such Liens are
the subject of Permitted Protests and if the Liens are released, discharged, or
bonded against within 30 days of each such Lien first being filed of record or,
if earlier, at least 5 days prior to the date on which assets that are subject
to such Liens are subject to being sold or forfeited and, in any such case,
Lender shall have the absolute right to establish and maintain a reserve against
the Borrowing Base and the Maximum Revolver Amount in an amount equal to the
aggregate amount of the underlying claims (determined by Agent, in its Permitted
Discretion, and irrespective of any Permitted Protests with respect thereto and
including any penalties or interest that are estimated by Agent, in its
Permitted Discretion, to arise in connection therewith);
8.8. If a judgment or other claim becomes a Lien or
encumbrance upon any material portion of any Loan Party's or any Subsidiary of a
Loan Party's properties or assets;
8.9. (i) If a Term Loan B Event of Default shall occur, or
(ii) if there is a default in any other material agreement to which any Loan
Party or any Subsidiary of a Loan Party is a party and, in the case of this
clause (ii), such default (a) occurs at the final maturity of the obligations
thereunder, or (b) results in a right by the other party thereto, irrespective
of whether exercised, to accelerate the maturity of the applicable Loan Party's
or Subsidiary's obligations thereunder, or to terminate such agreement;
8.10. If any Loan Party or any Subsidiary of a Loan Party
makes any payment on account of Indebtedness that has been contractually
subordinated in right of payment to the payment of the Obligations, except to
the extent such payment is permitted by the terms of the subordination
provisions applicable to such Indebtedness;
8.11. If any material misstatement or misrepresentation
exists now or hereafter in any warranty, representation, statement, or Record
made to the Lender Group by any Loan Party, any Subsidiary of a Loan Party, or
any officer, employee, agent, or director of any Loan Party or any Subsidiary of
a Loan Party;
8.12. If the obligation of any Guarantor under any Guaranty
is limited or terminated by operation of law or by such Guarantor thereunder
except in connection with a transaction permitted under Section 7.3;
8.13. If this Agreement or any other Loan Document that
purports to create a Lien, shall, for any reason, fail or cease to create a
valid and perfected and, except to the extent permitted by the terms hereof or
thereof, first priority Lien on or security interest in the Collateral covered
hereby or thereby;
8.14. Any provision of any Loan Document shall at any time
for any reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by any Loan Party or any Subsidiary of
a Loan Party, or a proceeding shall be commenced by any Loan Party or any
Subsidiary of a Loan Party, or by any Governmental Authority having jurisdiction
over any Loan Party or any Subsidiary of a Loan Party, seeking to establish the
invalidity or unenforceability thereof, or any Loan Party or any Subsidiary of a
Loan Party shall deny that it has any liability or obligation purported to be
created under any Loan Document,
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8.15. If any Loan Party or any of its Subsidiaries or any
of their ERISA Affiliates shall have made a complete or partial withdrawal from
a Multiemployer Plan, and, as a result of such complete or partial withdrawal,
such Loan Party or any of its Subsidiaries or such ERISA Affiliate incurs a
withdrawal liability in an annual amount exceeding $50,000; or a Multiemployer
Plan enters reorganization status under Section 4241 of ERISA, and, as a result
thereof, a Loan Party's or such Subsidiary's, or such ERISA Affiliate's annual
contribution requirement with respect to such Multiemployer Plan increases in an
annual amount exceeding $50,000; or
8.16. If any Termination Event with respect to any Benefit
Plan shall have occurred, and, 30 days thereafter, (i) such Termination Event
(if correctable) shall not have been corrected, and (ii) the then current value
of such Benefit Plan's vested benefits exceeds the then current value of assets
allocable to such benefits in such Benefit Plan by more than $50,000 (or, in the
case of a Termination Event involving liability under Section 409, 502(i),
502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 4971
or 4975 of the Code, the liability is in excess of such amount).
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1. RIGHTS AND REMEDIES. Upon the occurrence, and during
the continuation, of an Event of Default, the Required Lenders (at their
election but without notice of their election and without demand) may authorize
and instruct Agent to do any one or more of the following on behalf of the
Lender Group (and Agent, acting upon the instructions of the Required Lenders,
shall do the same on behalf of the Lender Group), all of which are authorized by
Borrowers:
(a) Declare all Obligations, whether evidenced
by this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable;
(b) Cease advancing money or extending credit to
or for the benefit of Borrowers under this Agreement, under any of the Loan
Documents, or under any other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the
other Loan Documents as to any future liability or obligation of the Lender
Group, but without affecting any of the Collateral Agent's Liens in the
Collateral and without affecting the Obligations; and
(d) The Lender Group shall have all other rights
and remedies available to it at law or in equity pursuant to any other Loan
Documents; provided, however, that upon the occurrence of any Event of Default
described in Section 8.4 or Section 8.5, in addition to the remedies set forth
above, without any notice to Loan Parties or any other Person or any act by the
Lender Group, the Commitments shall automatically terminate and the Obligations
then outstanding, together with all accrued and unpaid interest thereon, and all
fees and all other amounts due under this Agreement and the other Loan
Documents, shall automatically and immediately become due and payable, without
presentment, demand, protest, or notice of any kind, all of which are expressly
waived by Loan Parties.
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9.2. REMEDIES CUMULATIVE. The rights and remedies of the
Lender Group under this Agreement, the other Loan Documents, and all other
agreements shall be cumulative. The Lender Group shall have all other rights and
remedies not inconsistent herewith as provided under the Code, by law, or in
equity. No exercise by the Lender Group of one right or remedy shall be deemed
an election, and no waiver by the Lender Group of any Event of Default shall be
deemed a continuing waiver. No delay by the Lender Group shall constitute a
waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Loan Party fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its Permitted
Discretion and without prior notice to any Loan Party, may do any or all of the
following: (a) make payment of the same or any part thereof, (b) set up such
reserves in Borrowers' Loan Account as Agent deems necessary to protect the
Lender Group from the exposure created by such failure, or (c) in the case of
the failure to comply with Section 6.8 hereof, obtain and maintain insurance
policies of the type described in Section 6.8 and take any action with respect
to such policies as Agent deems prudent. Any such amounts paid by Agent shall
constitute Lender Group Expenses and any such payments shall not constitute an
agreement by the Lender Group to make similar payments in the future or a waiver
by the Lender Group of any Event of Default under this Agreement. Agent need not
inquire as to, or contest the validity of, any such expense, tax, or Lien and
the receipt of the usual official notice for the payment thereof shall be
conclusive evidence that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1. DEMAND; PROTEST; ETC. Each Loan Party waives demand,
protest, notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension,
or renewal of documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group on which any such Loan Party may in any way be liable.
11.2. THE LENDER GROUP'S LIABILITY FOR COLLATERAL. Each
Loan Party hereby agrees that: (a) so long as the Lender Group complies with its
obligations, if any, under the Code, Agent shall not in any way or manner be
liable or responsible for: (i) the safekeeping of the Collateral, (ii) any loss
or damage thereto occurring or arising in any manner or fashion from any cause,
(iii) any diminution in the value thereof, or (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all
risk of loss, damage, or destruction of the Collateral shall be borne by Loan
Parties.
11.3. INDEMNIFICATION. Each Loan Party shall pay,
indemnify, defend, and hold the Agent-Related Persons, the Lender-Related
Persons, and each Participant (each, an "Indemnified Person") harmless (to the
fullest extent permitted by law) from and against any and all claims, demands,
suits, actions, investigations, proceedings, and damages, and all reasonable
attorneys fees and disbursements and other costs and expenses actually incurred
in connection
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therewith (as and when they are incurred and irrespective of whether suit is
brought), at any time asserted against, imposed upon, or incurred by any of them
(a) in connection with or as a result of or related to the execution, delivery,
enforcement, performance, or administration (including any restructuring or
workout with respect hereto) of this Agreement, any of the other Loan Documents,
or the transactions contemplated hereby or thereby or the monitoring of Loan
Parties' compliance with the terms of the Loan Documents, and (b) with respect
to any investigation, litigation, or proceeding related to this Agreement, any
other Loan Document, or the use of the proceeds of the credit provided hereunder
(irrespective of whether any Indemnified Person is a party thereto), or any act,
omission, event, or circumstance in any manner related thereto (all the
foregoing, collectively, the "Indemnified Liabilities"). The foregoing to the
contrary notwithstanding, Loan Parties shall have no obligation to any
Indemnified Person under this Section 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and the
repayment of the Obligations. If any Indemnified Person makes any payment to any
other Indemnified Person with respect to an Indemnified Liability as to which
Loan Parties were required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Loan Parties with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON.
11.4. ENVIRONMENTAL INDEMNITY. Without limiting Section
11.3 hereof, each Borrower shall pay, indemnify, defend, and hold harmless each
Indemnified Person against any and all Environmental Liabilities and Costs and
all other claims, demands, penalties, fines, liability (including strict
liability), losses, damages, costs and expenses (including reasonable legal fees
and expenses, consultant fees and laboratory fees), arising out of (a) any
releases or threatened releases of any Hazardous Materials (i) at any property
presently or formerly owned or operated by any Loan Party or any Subsidiary of a
Loan Party, or any predecessor in interest, or (ii) generated and disposed of by
a Loan Party or any Subsidiary of a Loan Party, or any predecessor in interest;
(b) any violations of Environmental Laws; (c) any Environmental Action relating
to a Loan Party or any Subsidiary of a Loan Party, or any predecessor in
interest; (d) any personal injury (including wrongful death) or property damage
(real or personal) arising out of exposure to Hazardous Materials used, handled,
generated, transported or disposed by a Loan Party or any Subsidiary of a Loan
Party, or any predecessor in interest; and (e) any breach of any warranty or
representation regarding environmental matters made by the Loan Parties in any
Loan Document.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by Loan Parties or Agent to the other relating to this Agreement or any
other Loan Document shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or certified mail
(postage prepaid, return receipt requested), overnight courier, electronic mail
(at
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such email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Loan
Parties in care of Administrative Borrower or to Agent, as the case may be, at
its address set forth below:
If to Administrative Borrower: SOURCE INTERLINK COMPANIES, INC.
00000 Xxxxxxxxx Xxxxxx Xxxx.
Xxxxx 000
Xxxxxx Xxxxxxx, Xxxxxxx
Attn: Xxxx Xxxxxxx
Fax No. 000-000-0000
with copies to: Xxxxx Xxxxx, P.A.
AutoNation Tower
110 S.E. 6th Street, 15th Floor
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Fax No. 000-000-0000
If to Agent or
Collateral Agent: XXXXX FARGO FOOTHILL, INC.
0000 Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Business Finance Manager
Fax No. 000-000-0000
with copies to: XXXXXXX XXXX & XXXXX LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. Xxxxxxx, Esq.
Fax No. 000-000-0000
Agent and Administrative Borrower may change the address at
which they are to receive notices hereunder, by notice in writing in the
foregoing manner given to the other party. All notices or demands sent in
accordance with this Section 12, other than notices by Agent in connection with
enforcement rights against the Collateral under the provisions of the Code,
shall be deemed received on the earlier of the date of actual receipt or 3
Business Days after the deposit thereof in the mail. Each Loan Party
acknowledges and agrees that notices sent by the Lender Group in connection with
the exercise of enforcement rights against Collateral under the provisions of
the Code shall be deemed sent when deposited in the mail or personally
delivered, or, where permitted by law, transmitted by telefacsimile or any other
method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN
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ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE
PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY
OF NEW YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. LOAN PARTIES AND
THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT
EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO
VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
13(b).
(c) LOAN PARTIES AND THE LENDER GROUP HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. LOAN PARTIES AND THE LENDER GROUP
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1. ASSIGNMENTS AND PARTICIPATIONS.
(a) Any Lender may assign and delegate to one or
more assignees (each an "Assignee") that are Eligible Transferees all, or any
ratable part of all, of the Obligations, the Commitments and the other rights
and obligations of such Lender hereunder and under the other Loan Documents, in
a minimum amount of $5,000,000; provided, however, that Borrowers and Agent may
continue to deal solely and directly with such Lender in connection with the
interest so assigned to an Assignee until (i) written notice of such assignment,
together with payment instructions, addresses, and related information with
respect to the Assignee, have been given to Administrative Borrower and Agent by
such Lender and the Assignee, (ii) such Lender and its Assignee have delivered
to Administrative Borrower and Agent an Assignment
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and Acceptance, and (iii) the assignor Lender or Assignee has paid to Agent for
Agent's separate account a processing fee in the amount of $5,000. Anything
contained herein to the contrary notwithstanding, the payment of any fees shall
not be required and the Assignee need not be an Eligible Transferee if such
assignment is in connection with any merger, consolidation, sale, transfer, or
other disposition of all or any substantial portion of the business or loan
portfolio of the assigning Lender.
(b) From and after the date that Agent notifies
the assignor Lender (with a copy to Administrative Borrower) that it has
received an executed Assignment and Acceptance and payment of the
above-referenced processing fee, (i) the Assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Lender under the Loan Documents, and (ii) the assignor
Lender shall, to the extent that rights and obligations hereunder and under the
other Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights (except with respect to Section 11.3 hereof)
and be released from any future obligations under this Agreement (and in the
case of an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement and the other
Loan Documents, such Lender shall cease to be a party hereto and thereto), and
such assignment shall effect a novation between Borrowers and the Assignee;
provided, however, that nothing contained herein shall release any assigning
Lender from obligations that survive the termination of this Agreement,
including such assigning Lender's obligations under Article 16 and Section 17.8
of this Agreement.
(c) By executing and delivering an Assignment
and Acceptance, the assigning Lender thereunder and the Assignee thereunder
confirm to and agree with each other and the other parties hereto as follows:
(1) other than as provided in such Assignment and Acceptance, such assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document furnished pursuant hereto, (2) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Borrowers or the performance or observance by Borrowers
of any of their obligations under this Agreement or any other Loan Document
furnished pursuant hereto, (3) such Assignee confirms that it has received a
copy of this Agreement, together with such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance, (4) such Assignee will, independently and
without reliance upon Agent, such assigning Lender or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement, (5) such Assignee appoints and authorizes Agent to take
such actions and to exercise such powers under this Agreement as are delegated
to Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (6) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) Immediately upon Agent's receipt of the
required processing fee payment and the fully executed Assignment and
Acceptance, this Agreement shall be deemed to
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be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written
consent of Agent, sell to one or more commercial banks, financial institutions,
or other Persons not Affiliates of such Lender (a "Participant") participating
interests in its Obligations, the Commitment, and the other rights and interests
of that Lender (the "Originating Lender") hereunder and under the other Loan
Documents (provided that no written consent of Agent shall be required in
connection with any sale of any such participating interests by a Lender to an
Eligible Transferee); provided, however, that (i) the Originating Lender shall
remain a "Lender" for all purposes of this Agreement and the other Loan
Documents and the Participant receiving the participating interest in the
Obligations, the Commitments, and the other rights and interests of the
Originating Lender hereunder shall not constitute a "Lender" hereunder or under
the other Loan Documents and the Originating Lender's obligations under this
Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) Borrowers,
Agent, and the Lenders shall continue to deal solely and directly with the
Originating Lender in connection with the Originating Lender's rights and
obligations under this Agreement and the other Loan Documents, (iv) no Lender
shall transfer or grant any participating interest under which the Participant
has the right to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B) reduce the interest
rate applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or substantially all of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through such Lender, or (E) change
the amount or due dates of scheduled principal repayments or prepayments or
premiums; and (v) all amounts payable by Borrowers hereunder shall be determined
as if such Lender had not sold such participation; except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement. The rights of any Participant only shall be
derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement or
the other Loan Documents or any direct rights as to the other Lenders, Agent,
Borrowers, the Collections of Borrowers or their Subsidiaries, the Collateral,
or otherwise in respect of the Obligations. No Participant shall have the right
to participate directly in the making of decisions by the Lenders among
themselves.
(f) In connection with any such assignment or
participation or proposed assignment or participation, a Lender may, subject to
the provisions of Section 17.8, disclose all documents and information which it
now or hereafter may have relating to Borrowers and their Subsidiaries and their
respective businesses.
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(g) Any other provision in this Agreement
notwithstanding, any Lender may at any time create a security interest in, or
pledge, all or any portion of its rights under and interest in this Agreement in
favor of any Federal Reserve Bank in accordance with Regulation A of the Federal
Reserve Bank or U.S. Treasury Regulation 31 CFR Section 203.24, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
14.2. SUCCESSORS. This Agreement shall bind and inure to
the benefit of the respective successors and assigns of each of the parties;
provided, however, that Borrowers may not assign this Agreement or any rights or
duties hereunder without the Lenders' prior written consent and any prohibited
assignment shall be absolutely void ab initio. No consent to assignment by the
Lenders shall release any Borrower from its Obligations. A Lender may assign
this Agreement and the other Loan Documents and its rights and duties hereunder
and thereunder pursuant to Section 14.1 hereof and, except as expressly required
pursuant to Section 14.1 hereof, no consent or approval by any Borrower is
required in connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1. AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by Loan Parties therefrom, shall be effective unless
the same shall be in writing and signed by the Required Lenders (or by Agent at
the written request of the Required Lenders) and Administrative Borrower (on
behalf of all Loan Parties) and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment, or consent shall,
unless in writing and signed by all of the Lenders affected thereby and
Administrative Borrower (on behalf of all Loan Parties) and acknowledged by
Agent, do any of the following:
(a) increase or extend any Commitment of any
Lender,
(b) postpone or delay any date fixed by this
Agreement or any other Loan Document for any payment of principal, interest,
fees, or other amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of
interest on, any loan or other extension of credit hereunder, or reduce any fees
or other amounts payable hereunder or under any other Loan Document,
(d) change the percentage of the Commitments
that is required to take any action hereunder,
(e) amend or modify this Section or any
provision of the Agreement providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted
by Section 16.12,
(g) change the definition of "Required Lenders"
or "Pro Rata Share",
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(h) contractually subordinate any of the
Collateral Agent's Liens,
(i) release any Borrower or Guarantor from any
obligation for the payment of money, or
(j) change the definition of Borrowing Base or
the definitions of Eligible Accounts, Eligible Equipment, Eligible Real Property
Collateral, Maximum Revolver Amount, Term Loan Amount or WFF Availability or
change Section 2.1(b); or
(k) amend any of the provisions of Section 16.
and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, affect
the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable,
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of, or
with respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Loan Parties, shall not require
consent by or the agreement of Loan Parties.
15.2. REPLACEMENT OF HOLDOUT LENDER. If any action to be
taken by the Lender Group or Agent hereunder requires the unanimous consent,
authorization, or agreement of all Lenders, and a Lender ("Holdout Lender")
fails to give its consent, authorization, or agreement, then Agent, upon at
least 5 Business Days prior irrevocable notice to the Holdout Lender, may
permanently replace the Holdout Lender with one or more substitute Lenders
(each, a "Replacement Lender"), and the Holdout Lender shall have not right to
refuse to be replaced hereunder. Such notice to replace the Holdout Lender shall
specify an effective date for such replacement, which date shall not be later
than 15 Business Days after the date such notice is given.
Prior to the effective date of such replacement, the Holdout
Lender and each Replacement Lender shall execute and deliver an Assignment and
Acceptance Agreement, subject only to the Holdout Lender being repaid its share
of the outstanding Obligations (including an assumption of its Pro Rata Share of
the Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance. The replacement of any Holdout Lender shall be
made in accordance with the terms of Section 14.1. Until such time as the
Replacement Lenders shall have acquired all of the Obligations, the Commitments,
and the other rights and obligations of the Holdout Lender hereunder and under
the other Loan Documents, the Holdout Lender shall remain obligated to make the
Holdout Lender's Pro Rata Share of Advances and to purchase a participation in
each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit.
15.3. NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent
or any Lender to exercise any right, remedy, or option under this Agreement or,
any other Loan Document, or
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delay by Agent or any Lender in exercising the same, will operate as a waiver
thereof. No waiver by Agent or any Lender will be effective unless it is in
writing, and then only to the extent specifically stated. No waiver by Agent or
any Lender on any occasion shall affect or diminish Agent's and each Lender's
rights thereafter to require strict performance by Loan Parties of any provision
of this Agreement. Agent's and each Lender's rights under this Agreement and the
other Loan Documents will be cumulative and not exclusive of any other right or
remedy that Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
16.1. APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender
hereby designates and appoints WFF as its representative under this Agreement
and the other Loan Documents and each Lender hereby irrevocably authorizes Agent
to execute and deliver each of the other Loan Documents on its behalf and to
take such other action on its behalf under the provisions of this Agreement and
each other Loan Document and to exercise such powers and perform such duties as
are expressly delegated to Agent by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto.
Agent agrees to act as such on the express conditions contained in this Section
16. The provisions of this Section 16 (other than the proviso to Section
16.11(d)) are solely for the benefit of Agent, and the Lenders, and Loan Parties
and their Subsidiaries shall have no rights as a third party beneficiary of any
of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that WFF is
merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections of Loan Parties and their Subsidiaries, and related matters, (b)
execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Loan Documents, (c)
make Advances, for itself or on behalf of Lenders as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections of
Loan Parties and their Subsidiaries as provided in the Loan Documents, (e) open
and maintain such bank accounts and cash management accounts as Agent deems
necessary and appropriate in accordance with the Loan Documents for the
foregoing purposes with respect to the Collateral and the Collections of Loan
Parties and their Subsidiaries, (f) perform, exercise, and enforce any and all
other rights and remedies of the Lender Group with respect to Loan Parties, the
Obligations, the Collateral, the Collections of Loan Parties and their
Subsidiaries, or otherwise related to any of same as
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provided in the Loan Documents, and (g) incur and pay such Lender Group Expenses
as Agent may deem necessary or appropriate for the performance and fulfillment
of its functions and powers pursuant to the Loan Documents.
16.2. DELEGATION OF DUTIES. Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. Agent shall not be responsible
for the negligence or misconduct of any agent or attorney-in-fact that it
selects as long as such selection was made without gross negligence or willful
misconduct.
16.3. LIABILITY OF AGENT. None of the Agent-Related Persons
shall (i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by any Loan Party or any
Subsidiary or Affiliate of any Loan Party, or any officer or director thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
any Loan Party or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the Books or properties of
Loan Parties or the books or records or properties of any of Loan Parties'
Subsidiaries or Affiliates.
16.4. RELIANCE BY AGENT. Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent, or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to Borrowers or counsel to any Lender), independent accountants and other
experts selected by Agent. Agent shall be fully justified in failing or refusing
to take any action under this Agreement or any other Loan Document unless Agent
shall first receive such advice or concurrence of the Lenders as it deems
appropriate and until such instructions are received, Agent shall act, or
refrain from acting, as it deems advisable. If Agent so requests, it shall first
be indemnified to its reasonable satisfaction by the Lenders against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of the requisite Lenders and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Lenders.
16.5. NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall
not be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default, except with respect to defaults in the payment of principal,
interest, fees, and expenses required to be paid to
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Agent for the account of the Lenders and, except with respect to Events of
Default of which Agent has actual knowledge, unless Agent shall have received
written notice from a Lender or Administrative Borrower referring to this
Agreement, describing such Default or Event of Default, and stating that such
notice is a "notice of default." Agent promptly will notify the Lenders of its
receipt of any such notice or of any Event of Default of which Agent has actual
knowledge. If any Lender obtains actual knowledge of any Event of Default, such
Lender promptly shall notify the other Lenders and Agent of such Event of
Default. Each Lender shall be solely responsible for giving any notices to its
Participants, if any. Subject to Section 16.4, Agent shall take such action with
respect to such Default or Event of Default as may be requested by the Required
Lenders in accordance with Section 9; provided, however, that unless and until
Agent has received any such request, Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable.
16.6. CREDIT DECISION. Each Lender acknowledges that none
of the Agent-Related Persons has made any representation or warranty to it, and
that no act by Agent hereinafter taken, including any review of the affairs of
Loan Parties and their Subsidiaries or Affiliates, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Loan Parties and any other Person party to a Loan Document,
and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to Loan Parties. Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of Loan Parties and any other Person party to a Loan Document.
Except for notices, reports, and other documents expressly herein required to be
furnished to the Lenders by Agent, Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Loan Parties and any other Person party to a
Loan Document that may come into the possession of any of the Agent-Related
Persons.
16.7. COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur
and pay Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, attorneys
fees and expenses, fees and expenses of financial accountants, advisors,
consultants, and appraisers, costs of collection by outside collection agencies,
auctioneer fees and expenses, and costs of security guards or insurance premiums
paid to maintain the Collateral, whether or not Loan Parties are obligated to
reimburse Agent or Lenders for such expenses pursuant to the Loan Agreement or
otherwise. Agent is authorized and directed to deduct and retain sufficient
amounts from the Collections of Loan Parties and their Subsidiaries received by
Agent to reimburse Agent for such out-of-pocket costs and
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expenses prior to the distribution of any amounts to Lenders. In the event Agent
is not reimbursed for such costs and expenses from the Collections of Loan
Parties and their Subsidiaries received by Agent, each Lender hereby agrees that
it is and shall be obligated to pay to or reimburse Agent for the amount of such
Lender's Pro Rata Share thereof. Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of Loan
Parties and without limiting the obligation of Loan Parties to do so), according
to their Pro Rata Shares, from and against any and all Indemnified Liabilities;
provided, however, that no Lender shall be liable for the payment to any
Agent-Related Person of any portion of such Indemnified Liabilities resulting
solely from such Person's gross negligence or willful misconduct nor shall any
Lender be liable for the obligations of any Defaulting Lender in failing to make
an Advance or other extension of credit hereunder. Without limitation of the
foregoing, each Lender shall reimburse Agent upon demand for such Lender's Pro
Rata Share of any costs or out-of-pocket expenses (including attorneys,
accountants, advisors, and consultants fees and expenses) incurred by Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that Agent is not
reimbursed for such expenses by or on behalf of Loan Parties. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.
16.8. AGENT IN INDIVIDUAL CAPACITY. WFF and its Affiliates
may make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in, and generally engage in any kind of banking,
trust, financial advisory, underwriting, or other business with Borrowers and
their Subsidiaries and Affiliates and any other Person party to any Loan
Documents as though WFF were not Agent hereunder, and, in each case, without
notice to or consent of the other members of the Lender Group. The other members
of the Lender Group acknowledge that, pursuant to such activities, WFF or its
Affiliates may receive information regarding Loan Parties or their Affiliates
and any other Person party to any Loan Documents that is subject to
confidentiality obligations in favor of Loan Parties or such other Person and
that prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver Agent will use its reasonable best
efforts to obtain), Agent shall not be under any obligation to provide such
information to them. The terms "Lender" and "Lenders" include WFF in its
individual capacity.
16.9. SUCCESSOR AGENT. Agent may resign as Agent upon 45
days notice to the Lenders. If Agent resigns under this Agreement, the Required
Lenders shall appoint a successor Agent for the Lenders. If no successor Agent
is appointed prior to the effective date of the resignation of Agent, Agent may
appoint, after consulting with the Lenders, a successor Agent. If Agent has
materially breached or failed to perform any material provision of this
Agreement or of applicable law, the Required Lenders may agree in writing to
remove and replace Agent with a successor Agent from among the Lenders. In any
such event, upon the acceptance of its appointment as successor Agent hereunder,
such successor Agent shall succeed to all the rights, powers, and duties of the
retiring Agent and the term "Agent" shall mean such successor Agent and the
retiring Agent's appointment, powers, and duties as Agent shall be terminated.
After any
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retiring Agent's resignation hereunder as Agent, the provisions of this Section
16 shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.
16.10. LENDER IN INDIVIDUAL CAPACITY. Any Lender and its
respective Affiliates may make loans to, issue letters of credit for the account
of, accept deposits from, acquire equity interests in and generally engage in
any kind of banking, trust, financial advisory, underwriting or other business
with Loan Parties and their Subsidiaries and Affiliates and any other Person
(other than the Lender Group) party to any Loan Documents as though such Lender
were not a Lender hereunder without notice to or consent of the other members of
the Lender Group. The other members of the Lender Group acknowledge that,
pursuant to such activities, such Lender and its respective Affiliates may
receive information regarding Loan Parties or their Affiliates and any other
Person party to any Loan Documents that is subject to confidentiality
obligations in favor of Loan Parties or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub-agent of the
Agent.
16.11. WITHHOLDING TAXES.
(a) If any Lender is a "foreign person" within
the meaning of the IRC and such Lender claims exemption from, or a reduction of,
U.S. withholding tax under Sections 1441 or 1442 of the IRC, such Lender agrees
with and in favor of Agent and Borrowers, to deliver to Agent and Administrative
Borrower:
(i) if such Lender claims an exemption from
withholding tax pursuant to its portfolio interest exception, (A) a
statement of the Lender, signed under penalty of perjury, that it is
not a (I) a "bank" as described in Section 881(c)(3)(A) of the IRC,
(II) a 10% shareholder of a Borrower (within the meaning of Section
871(h)(3)(B) of the IRC), or (III) a controlled foreign corporation
related to a Borrower within the meaning of Section 864(d)(4) of the
IRC, and (B) a properly completed and executed IRS Form W-8BEN, before
the first payment of any interest under this Agreement and at any other
time reasonably requested by Agent or Administrative Borrower;
(ii) if such Lender claims an exemption from, or
a reduction of, withholding tax under a United States tax treaty,
properly completed and executed IRS Form W-8BEN before the first
payment of any interest under this Agreement and at any other time
reasonably requested by Agent or Administrative Borrower;
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(iii) if such Lender claims that interest paid
under this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade or
business of such Lender, two properly completed and executed copies of
IRS Form W-8ECI before the first payment of any interest is due under
this Agreement and at any other time reasonably requested by Agent or
Administrative Borrower;
(iv) such other form or forms as may be required
under the IRC or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Administrative Borrower of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or
reduction of, withholding tax under a United States tax treaty by providing IRS
Form W-8BEN and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of Borrowers to such Lender,
such Lender agrees to notify Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of Borrowers to such Lender. To the
extent of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN
as no longer valid.
(c) If any Lender is entitled to a reduction in
the applicable withholding tax, Agent may withhold from any interest payment to
such Lender an amount equivalent to the applicable withholding tax after taking
into account such reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to Agent, then Agent may
withhold from any interest payment to such Lender not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental
Authority of the United States or other jurisdiction asserts a claim that Agent
did not properly withhold tax from amounts paid to or for the account of any
Lender (because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Lender shall indemnify and hold
Agent harmless for all amounts paid, directly or indirectly, by Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to Agent under this Section, together
with all costs and expenses (including attorneys fees and expenses). The
obligation of the Lenders under this subsection shall survive the payment of all
Obligations and the resignation or replacement of Agent.
(e) All payments made by Borrowers hereunder or
under any note or other Loan Document will be made without setoff, counterclaim,
or other defense, except as required by applicable law other than for Taxes (as
defined below). All such payments will be made free and clear of, and without
deduction or withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or hereafter
imposed by any jurisdiction (other than the United States) or by any political
subdivision or
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taxing authority thereof or therein (other than of the United States) with
respect to such payments (but excluding, any tax imposed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein (i) measured
by or based on the net income or net profits of a Lender, or (ii) to the extent
that such tax results from a change in the circumstances of the Lender,
including a change in the residence, place of organization, or principal place
of business of the Lender, or a change in the branch or lending office of the
Lender participating in the transactions set forth herein) and all interest,
penalties or similar liabilities with respect thereto (all such non-excluded
taxes, levies, imposts, duties, fees, assessments or other charges being
referred to collectively as "Taxes"). If any Taxes are so levied or imposed,
each Borrower agrees to pay the full amount of such Taxes, and such additional
amounts as may be necessary so that every payment of all amounts due under this
Agreement or under any note, including any amount paid pursuant to this Section
16.11(e) after withholding or deduction for or on account of any Taxes, will not
be less than the amount provided for herein; provided, however, that Borrowers
shall not be required to increase any such amounts payable to Agent or any
Lender (i) that is not organized under the laws of the United States, if such
Person fails to comply with the other requirements of this Section 16.11, or
(ii) if the increase in such amount payable results from Agent's or such
Lender's own willful misconduct or gross negligence. Borrowers will furnish to
Agent as promptly as possible after the date the payment of any Taxes is due
pursuant to applicable law certified copies of tax receipts evidencing such
payment by Borrowers.
16.12. COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize
Agent, at its option and in its sole discretion, to release or authorize the
release of any Lien on any Collateral (i) upon the termination of the
Commitments and payment and satisfaction in full by Loan Parties of all
Obligations, (ii) constituting property being sold or disposed of if a release
is required or desirable in connection therewith and if Administrative Borrower
certifies to Agent that the sale or disposition is permitted under Section 7.4
of this Agreement or the other Loan Documents (and Agent may rely conclusively
on any such certificate, without further inquiry), (iii) constituting property
in which no Loan Party or its Subsidiaries owned any interest at the time the
Collateral Agent's Lien was granted nor at any time thereafter, or (iv)
constituting property leased to a Loan Party or its Subsidiaries under a lease
that has expired or is terminated in a transaction permitted under this
Agreement. Except as provided above, Agent will not execute and deliver or
authorize any release of any Lien on any Collateral without the prior written
authorization of (y) if the release is of all or substantially all of the
Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon
request by Agent or Administrative Borrower at any time, the Lenders will
confirm in writing Agent's authority to release any such Liens on particular
types or items of Collateral pursuant to this Section 16.12; provided, however,
that (1) Agent shall not be required to execute any document necessary to
evidence such release on terms that, in Agent's opinion, would expose Agent to
liability or create any obligation or entail any consequence other than the
release of such Lien without recourse, representation, or warranty, and (2) such
release shall not in any manner discharge, affect, or impair the Obligations or
any Liens (other than those expressly being released) upon (or obligations of
Loan Parties in respect of) all interests retained by Loan Parties, including,
the proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
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(b) Agent shall have no obligation whatsoever to
any of the Lenders to assure that the Collateral exists or is owned by Borrowers
or is cared for, protected, or insured or has been encumbered, or that the
Collateral Agent's Liens have been properly or sufficiently or lawfully created,
perfected, protected, or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent's own interest in the Collateral in its capacity as
one of the Lenders and that Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.
16.13. RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF
PAYMENTS.
(a) Each of the Lenders agrees that it shall
not, without the express written consent of Agent, and that it shall, to the
extent it is lawfully entitled to do so, upon the written request of Agent, set
off against the Obligations, any amounts owing by such Lender to Loan Parties or
any deposit accounts of Loan Parties now or hereafter maintained with such
Lender. Each of the Lenders further agrees that it shall not, unless
specifically requested to do so in writing by Agent, take or cause to be taken
any action, including, the commencement of any legal or equitable proceedings,
to foreclose any Lien on, or otherwise enforce any security interest in, any of
the Collateral.
(b) If, at any time or times any Lender shall
receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of
Collateral or any payments with respect to the Obligations, except for any such
proceeds or payments received by such Lender from Agent pursuant to the terms of
this Agreement, or (ii) payments from Agent in excess of such Lender's ratable
portion of all such distributions by Agent, such Lender promptly shall (1) turn
the same over to Agent, in kind, and with such endorsements as may be required
to negotiate the same to Agent, or in immediately available funds, as
applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this Agreement, or
(2) purchase, without recourse or warranty, an undivided interest and
participation in the Obligations owed to the other Lenders so that such excess
payment received shall be applied ratably as among the Lenders in accordance
with their Pro Rata Shares; provided, however, that to the extent that such
excess payment received by the purchasing party is thereafter recovered from it,
those purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor shall
be returned to such purchasing party, but without interest except to the extent
that such purchasing party is required to pay interest in connection with the
recovery of the excess payment.
16.14. AGENCY FOR PERFECTION. Agent hereby appoints each
other Lender as its agent (and each Lender hereby accepts such appointment) for
the purpose of perfecting the Collateral Agent's Liens in assets which, in
accordance with Article 9 of the Code can be perfected only by possession or
control. Should any Lender obtain possession or control of any such Collateral,
such Lender shall notify Agent thereof, and, promptly upon Agent's request
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therefor shall deliver possession or control of such Collateral to Collateral
Agent or in accordance with Agent's instructions.
16.15. PAYMENTS BY AGENT TO THE LENDERS. All payments to be
made by Agent to the Lenders shall be made by bank wire transfer of immediately
available funds pursuant to such wire transfer instructions as each party may
designate for itself by written notice to Agent. Concurrently with each such
payment, Agent shall identify whether such payment (or any portion thereof)
represents principal, premium, or interest of the Obligations.
16.16. CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS.
Each member of the Lender Group authorizes and directs Agent and/or Collateral
Agent, as applicable, to enter into this Agreement, the Intercreditor and
Collateral Agency Agreement and the other Loan Documents. Each member of the
Lender Group agrees that any action taken by Agent and/or Collateral Agent in
accordance with the terms of this Agreement, the Intercreditor and Collateral
Agency Agreement and the other Loan Documents relating to the Collateral and the
exercise by Agent and/or Collateral Agent of its powers set forth therein or
herein, together with such other powers that are reasonably incidental thereto,
shall be binding upon all of the Lenders.
16.17. FIELD AUDITS AND EXAMINATION REPORTS;
CONFIDENTIALITY; DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION. By
becoming a party to this Agreement, each Lender:
(a) is deemed to have requested that Agent
furnish such Lender, promptly after it becomes available, a copy of each field
audit or examination report (each a "Report" and collectively, "Reports")
prepared by Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent
does not (i) make any representation or warranty as to the accuracy of any
Report, and (ii) shall not be liable for any information contained in any
Report,
(c) expressly agrees and acknowledges that the
Reports are not comprehensive audits or examinations, that Agent or other party
performing any audit or examination will inspect only specific information
regarding Loan Parties and will rely significantly upon the Books, as well as on
representations of Loan Parties' personnel,
(d) agrees to keep all Reports and other
material, non-public information regarding Loan Parties and their Subsidiaries
and their operations, assets, and existing and contemplated business plans in a
confidential manner in accordance with Section 17.8, and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold Agent
and any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or fail to take or any conclusion the indemnifying
Lender may reach or draw from any Report in connection with any loans or other
credit accommodations that the indemnifying Lender has made or may make to Loan
Parties, or the indemnifying Lender's participation in, or the indemnifying
Lender's
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purchase of, a loan or loans of Borrowers; and (ii) to pay and protect, and
indemnify, defend and hold Agent, and any such other Lender preparing a Report
harmless from and against, the claims, actions, proceedings, damages, costs,
expenses, and other amounts (including, attorneys fees and costs) incurred by
Agent and any such other Lender preparing a Report as the direct or indirect
result of any third parties who might obtain all or part of any Report through
the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Loan Parties to Agent that has not been contemporaneously
provided by Loan Parties to such Lender, and, upon receipt of such request,
Agent shall provide a copy of same to such Lender, (y) to the extent that Agent
is entitled, under any provision of the Loan Documents, to request additional
reports or information from Loan Parties, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender's
notice to Agent, whereupon Agent promptly shall request of Administrative
Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Administrative Borrower, Agent promptly
shall provide a copy of same to such Lender, and (z) any time that Agent renders
to Administrative Borrower a statement regarding the Loan Account, Agent shall
send a copy of such statement to each Lender.
16.18. SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding
that certain of the Loan Documents now or hereafter may have been or will be
executed only by or in favor of Agent in its capacity as such, and not by or in
favor of the Lenders, any and all obligations on the part of Agent (if any) to
make any credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 16.7, no member of the Lender Group shall
have any liability for the acts or any other member of the Lender Group. No
Lender shall be responsible to any Borrower or any other Person for any failure
by any other Lender to fulfill its obligations to make credit available
hereunder, nor to advance for it or on its behalf in connection with its
Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.
17. GENERAL PROVISIONS.
17.1. EFFECTIVENESS. This Agreement shall be binding and
deemed effective when executed by Loan Parties, Agent, and each Lender whose
signature is provided for on the signature pages hereof.
17.2. SECTION HEADINGS. Headings and numbers have been set
forth herein for convenience only. Unless the contrary is compelled by the
context, everything contained in each Section applies equally to this entire
Agreement.
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17.3. INTERPRETATION. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against the
Lender Group or Loan Parties, whether under any rule of construction or
otherwise. On the contrary, this Agreement has been reviewed by all parties and
shall be construed and interpreted according to the ordinary meaning of the
words used so as to accomplish fairly the purposes and intentions of all parties
hereto.
17.4. SEVERABILITY OF PROVISIONS. Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.
17.5. AMENDMENTS IN WRITING. This Agreement only can be
amended by a writing in accordance with Section 15.1.
17.6. COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement
may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, shall be
deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Agreement. Delivery of an executed counterpart
of this Agreement by telefacsimile shall be equally as effective as delivery of
an original executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telefacsimile also shall deliver an
original executed counterpart of this Agreement but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement. The foregoing shall apply to each other Loan
Document mutatis mutandis.
17.7. REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the
incurrence or payment of the Obligations by any Borrower or Guarantor or the
transfer to the Lender Group of any property should for any reason subsequently
be declared to be void or voidable under any state or federal law relating to
creditors' rights, including provisions of the Bankruptcy Code relating to
fraudulent conveyances, preferences, or other voidable or recoverable payments
of money or transfers of property (collectively, a "Voidable Transfer"), and if
the Lender Group is required to repay or restore, in whole or in part, any such
Voidable Transfer, or elects to do so upon the reasonable advice of its counsel,
then, as to any such Voidable Transfer, or the amount thereof that the Lender
Group is required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrowers or Guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.
17.8. CONFIDENTIALITY. The Agent and the Lenders each
individually (and not jointly or jointly and severally) agree that material,
non-public information regarding Borrowers and their Subsidiaries, their
operations, assets, and existing and contemplated business plans shall be
treated by Agent and the Lenders in a confidential manner, and shall not be
disclosed by Agent and the Lenders to Persons who are not parties to this
Agreement, except: (a) to attorneys for and other advisors, accountants,
auditors, and consultants to any member of the Lender Group, (b) to Subsidiaries
and Affiliates of any member of the Lender Group (including the Bank Product
Providers), provided that any such Subsidiary or Affiliate shall have agreed to
receive such information hereunder subject to the terms of this Section 17.8,
(c) as may be required by statute, decision, or judicial or administrative
order, rule, or regulation, (d) as may be
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agreed to in advance by Administrative Borrower or its Subsidiaries or as
requested or required by any Governmental Authority pursuant to any subpoena or
other legal process, (e) as to any such information that is or becomes generally
available to the public (other than as a result of prohibited disclosure by
Agent or the Lenders), (f) in connection with any assignment, prospective
assignment, sale, prospective sale, participation or prospective participations,
or pledge or prospective pledge of any Lender's interest under this Agreement,
provided that any such assignee, prospective assignee, purchaser, prospective
purchaser, participant, prospective participant, pledgee, or prospective pledgee
shall have agreed in writing to receive such information hereunder subject to
the terms of this Section, and (g) in connection with any litigation or other
adversary proceeding involving parties hereto which such litigation or adversary
proceeding involves claims related to the rights or duties of such parties under
this Agreement or the other Loan Documents. The provisions of this Section 17.8
shall survive for 2 years after the payment in full of the Obligations. Anything
contained herein or in any other Loan Document to the contrary notwithstanding,
the obligations of confidentiality contained herein and therein, as they relate
to the transactions contemplated hereby, shall not apply to the federal tax
structure or federal tax treatment of such transactions, and each party hereto
(and any employee, representative, or agent of any party hereto) may disclose to
any and all Persons, without limitation of any kind, the federal tax structure
and federal tax treatment of such transactions (including all written materials
related to such tax structure and tax treatment). The preceding sentence is
intended to cause the transactions contemplated hereby to not be treated as
having been offered under conditions of confidentiality for purposes of Section
1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations
promulgated under Section 6011 of the IRC, and shall be construed in a manner
consistent with such purpose. In addition, each party hereto acknowledges that
it has no proprietary or exclusive rights to the tax structure of the
transactions contemplated hereby or any tax matter or tax idea related thereto.
17.9. INTEGRATION. This Agreement, together with the other
Loan Documents, reflects the entire understanding of the parties with respect to
the transactions contemplated hereby and shall not be contradicted or qualified
by any other agreement, oral or written, before the date hereof.
17.10. PARENT AS AGENT FOR BORROWERS. Each Borrower hereby
irrevocably appoints Parent as the borrowing agent and attorney-in-fact for all
Borrowers (the "Administrative Borrower") which appointment shall remain in full
force and effect unless and until Agent shall have received prior written notice
signed by each Borrower that such appointment has been revoked and that another
Borrower has been appointed Administrative Borrower. Each Borrower hereby
irrevocably appoints and authorizes the Administrative Borrower (i) to provide
Agent with all notices with respect to Advances and Letters of Credit obtained
for the benefit of any Borrower and all other notices and instructions under
this Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Advances and Letters of Credit and to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement. It is understood that the handling of the Loan
Account and Collateral of Borrowers in a combined fashion, as more fully set
forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender Group shall not incur
liability to any Borrower as a result hereof. Each Borrower expects to derive
benefit, directly or indirectly, from the handling of the Loan
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Account and the Collateral in a combined fashion since the successful operation
of each Borrower is dependent on the continued successful performance of the
integrated group. To induce the Lender Group to do so, and in consideration
thereof, each Borrower hereby jointly and severally agrees to indemnify each
member of the Lender Group and hold each member of the Lender Group harmless
against any and all liability, expense, loss or claim of damage or injury, made
against the Lender Group by any Borrower or by any third party whosoever,
arising from or incurred by reason of (a) the handling of the Loan Account and
Collateral of Borrowers as herein provided, (b) the Lender Group's relying on
any instructions of the Administrative Borrower, or (c) any other action taken
by the Lender Group hereunder or under the other Loan Documents, except that
Borrowers will have no liability to the relevant Agent-Related Person or
Lender-Related Person under this Section 17.9 with respect to any liability that
has been finally determined by a court of competent jurisdiction to have
resulted solely from the gross negligence or willful misconduct of such
Agent-Related Person or Lender-Related Person, as the case may be.
18. GUARANTY.
18.1. GUARANTY; LIMITATION OF LIABILITY. Each Guarantor
hereby unconditionally and irrevocably jointly and severally guarantees the
punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all Obligations of Borrowers now or hereafter existing under any
Loan Document, whether for principal, interest fees, expenses or otherwise (such
obligations, to the extent not paid by Borrowers, being the "Guaranteed
Obligations"), and agrees to pay any and all reasonable expenses (including
reasonable counsel fees and expenses) incurred by Agent and Lenders in enforcing
any rights under the guaranty set forth in this Section 18. Without limiting the
generality of the foregoing, the Guarantors' liability shall extend to all
amounts that constitute part of the Guaranteed Obligations and would be owed by
Borrowers to Lenders under any Loan Document but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving Borrower.
18.2. GUARANTY ABSOLUTE. Each Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of Lenders
with respect thereto. The obligations of each Guarantor under this Section 18
are independent of the Guaranteed Obligations, and a separate action or actions
may be brought and prosecuted against each Guarantor to enforce such
obligations, irrespective of whether any action is brought against any Borrower
or whether any Borrower is joined in any such action or actions. The liability
of each Guarantor under this Section 18 shall be irrevocable, absolute and
unconditional irrespective of, and each Guarantor hereby irrevocably waives any
defenses it may now or hereafter have in any way relating to, any or all of the
following:
(a) any lack of validity or enforceability of
any Loan Document or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Guaranteed Obligations,
or any other amendment or waiver of or any consent to departure from any Loan
Document, including, without limitation, any increase in
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the Guaranteed Obligations resulting from the extension of additional credit to
any Borrower or otherwise;
(c) any taking, exchange, release or
non-perfection of any Collateral, or any taking, release or amendment or waiver
of or consent to departure from any other guaranty, for all or any of the
Guaranteed Obligations;
(d) any change, restructuring or termination of
the corporate structure or existence of any Borrower or Guarantor; or
(e) any other circumstance (including, without
limitation, any statute of limitations) or any existence of or reliance on any
representation by Lenders that might otherwise constitute a defense available
to, or a discharge of, any Guarantor, any Borrower or any other guarantor or
surety.
This Section 18 shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by Lenders or any other Person, all as though such
payment had not been made.
18.3. WAIVER. Each Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Section 18 and any requirement that Collateral
Agent, Agent or Lenders exhaust any right or take any action against Borrowers
or any other Person or any Collateral. Each Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated herein and that the waiver set forth in this Section 18 is
knowingly made in contemplation of such benefits. Each Guarantor hereby waives
any right to revoke this Section 18, and acknowledges that this Section 18 is
continuing in nature and applies to all Guaranteed Obligations, whether existing
now or in the future.
18.4. CONTINUING GUARANTY; ASSIGNMENTS. This Section 18 is
a continuing guaranty and shall (a) remain in full force and effect until the
later of the cash payment in full of the Guaranteed Obligations (other than
indemnification obligations as to which no claim has been made) and all other
amounts payable under this Section 18 and the Maturity Date, (b) be binding upon
each Guarantor, their respective successors and assigns and (c) inure to the
benefit of and be enforceable by Agent and Lenders and its successors, pledgees,
transferees and assigns. Without limiting the generality of the foregoing clause
(c), any Lender may pledge, assign or otherwise transfer all or any portion of
its rights and obligations under this Agreement (including, without limitation,
all or any portion of its loans owing to it and any note held by it) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted such Lender herein or otherwise, in each
case as provided in Section 14.1.
18.5. SUBROGATION. No Guarantor will exercise any rights
that it may now or hereafter acquire against any Borrower or any other insider
guarantor that arise from the existence, payment, performance or enforcement of
such Guarantor's obligations under this Section 18, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of
Lenders
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against any Borrower or any other insider guarantor or any Collateral, whether
or not such claim, remedy or right arises in equity or under contract, statute
or common law, including, without limitation, the right to take or receive from
any Borrower or any other insider guarantor, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security solely
on account of such claim, remedy or right, unless and until all of the
Guaranteed Obligations and all other amounts payable under this Section 18 shall
have been paid in full in cash and this Agreement shall have terminated. If any
amount shall be paid to any Guarantor in violation of the immediately preceding
sentence at any time prior to the later of the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Section 18 and
the termination of this Agreement, such amount shall be held in trust for the
benefit of Lenders and shall forthwith be paid to Agent to be credited and
applied to the Guaranteed Obligations and all other amounts payable under this
Section 18, whether matured or unmatured, in accordance with the terms of this
Agreement, or to be held as collateral for any Guaranteed Obligations or other
amounts payable under this Section 18 thereafter arising. If (i) any Guarantor
shall make payment to Lenders of all or any part of the Guaranteed Obligations,
(ii) all of the Guaranteed Obligations and all other amounts payable under this
Section 18 shall be paid in full in cash and (iii) this Agreement has
terminated, Lenders will, at such Guarantor's request and expense, execute and
deliver to such Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
such Guarantor of an interest in the Guaranteed Obligations resulting from such
payment by such Guarantor.
18.6. JOINT AND SEVERAL OBLIGATIONS. All of the Guaranteed
Obligations of the Guarantors hereunder and the other Loan Documents are joint
and several. Lenders may, in their sole and absolute discretion, enforce the
provisions hereof against any of the Guarantors, and shall not be required to
proceed against all Guarantors jointly or seek payment from the Guarantors
ratably.
18.7. JUDGMENT CURRENCY. The specification under this
Agreement of US Dollars and payment in New York City is of the essence. Each
Guarantor's obligations hereunder and under the other Loan Documents to make
payments in US Dollars shall not be discharged or satisfied by any tender or
recovery pursuant to any judgment expressed in or converted into any currency
other than US Dollars, except to the extent that such tender or recovery results
in the effective receipt by Lender Group and Agent of the full amount of US
Dollars expressed to be payable to the Agent and Lender Group under this
Agreement or the other Loan Documents. If, for the purpose of obtaining or
enforcing judgment in any court, it is necessary to convert into or from any
currency other than US Dollars (such other currency being hereinafter referred
to as the "Judgment Currency") an amount due in US Dollars, the rate of exchange
used shall be that at which Lender Group or Agent could, in accordance with
normal banking procedures, purchase US Dollars with the Judgment Currency on the
Business Day preceding that on which final judgment is given. The obligation of
each Guarantor in respect of any such sum due from it to Lender Group or Agent
hereunder shall, notwithstanding any judgment in such Judgment Currency, be
discharged only to the extent that, on the Business Day immediately following
the date on which Lender Group or Agent receives any sum adjudged to be so due
in the Judgment Currency, Lender Group or Agent may, in accordance with normal
banking procedures, purchase US Dollars with the Judgment Currency. If the US
Dollars so purchased are less than the sum originally due to Agent or Lender
Group in US Dollars, each
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Guarantor agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify Lender Group and the Agent against such loss, and if the
US Dollars so purchased exceed the sum originally due to Lender Group or the
Agents in US Dollars, the applicable Lender and Agent severally agree to remit
to such Guarantor such excess.
18.8. CONFLICTS. Solely with respect to the Canadian
Guarantors, this Section 18 is intended to supplement, but not replace or amend,
the Canadian Guaranty, and in the case of any conflict or inconsistency between
any terms of this Section 18, on the one hand, and the Canadian Guaranty, on the
other hand, then the terms of the Canadian Guaranty shall be controlling.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
BORROWERS:
SOURCE INTERLINK COMPANIES, INC.
a Missouri Corporation
SOURCE U.S. MARKETING SERVICES, INC.
a Delaware corporation
BRAND MANUFACTURING CORP.
a New York corporation
SOURCE - MYCO, INC.
a Delaware corporation
SOURCE - XXXXXX INDUSTRIES, INC.
a Delaware corporation
SOURCE - HUCK STORE FIXTURE COMPANY
a Delaware corporation
HUCK STORE FIXTURE COMPANY OF NORTH
CAROLINA
a North Carolina corporation
INTERNATIONAL PERIODICAL DISTRIBUTORS,
INC.
a Nevada corporation
SOURCE INTERLINK INTERNATIONAL INC.
a Delaware corporation
XXXXX X. XXXXX, INC.
a New York corporation
By: /s/ Xxxx Xxxxxxx
-------------------------------
Title: Authorized Signatory
GUARANTORS:
THE SOURCE-CANADA CORP.
an Ontario corporation
SOURCE INTERLINK CANADA INC.
a British Columbia corporation
SOURCE - CHESTNUT DISPLAY SYSTEMS, INC.
a Delaware corporation
T.C.E. CORPORATION
a Delaware corporation
VAIL COMPANIES, INC.
a Delaware corporation
THE INTERLINK COMPANIES, INC.
a Delaware corporation
UNIVERSAL CIRCULATION SERVICES, INC.
a California corporation
By: /s/ Xxxx Xxxxxxx
---------------------------------
Title: Authorized Signatory
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XXXXX FARGO FOOTHILL, INC.,
a California corporation, as Agent and as a Lender
By: /s/ Xxxxxxx Xxxxx
-------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
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